Gold Prices Could Lose More Luster Due To Fed Worries

Janet Yellen set to speak today

The Bloomberg dollar index climbed for a second day, though pared some gains, after Yellen said raising borrowing costs gradually is the appropriate policy stance considering the uncertainty surrounding inflation.

US stock-market indices relinquished earlier gains to close little changed on Tuesday, 26 September 2017 with the Dow industrials extending a losing streak to a fourth session.

"Although we judge that inflation will most likely stabilize around 2% over the next few years, the odds that it could turn out to be noticeably different are considerable", pointing out that, "there is a 30% probability that inflation could be greater than 3% or less than 1% next year".

As of 12:43 p.m. HK/SIN, the dollar index was up 0.09 percent to 93.09.DXY.

"You do have the announcement of tax reform coming out today, so I imagine there is a little bit of optimism, even if it is short lived", Issa said.

"While suggesting that the FOMC generally views the soft inflation numbers as transitory, she again gave credence to the notion that there is something structural going on in the economy that the Fed has yet to fully understand, which would warrant caution regarding the pace of hikes", says Royce Mendes, an economist at CIBC Capital Markets.

Silver was flat at $16.80 per ounce, having dropped 2.4 percent in the previous session, its biggest one day fall since mid-August.

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Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the greenback. But thanks to the durable goods print and statements from Yellen and other influencial members of the Fed, it's "quite clear. that we're getting a rate hike in December".

North Korea's foreign minister said on Monday that a weekend tweet by President Donald Trump counted as a declaration of war and that Pyongyang reserved the right to take countermeasures, including shooting down United States bombers even if they are not in its air space. Futures with a delivery date in December were traded in the area of about $ 1,301.70. NAR said its pending home sales index plunged by 2.6% to 106.3 in August from 109.1 in July.

India's Sensex was declining 0.9 percent and benchmark indexes in Indonesia and Malaysia were down around 0.1 percent, while Singapore's Straits Times index was rising 0.9 percent and the Taiwan Weighted rose 0.7 percent.

-The euro-area inflation rate may have accelerated a touch to 1.6 percent in September from 1.5 percent but the core will probably remain at 1.2 percent when data is out on Friday. China's Shanghai Composite Index was almost flat at 3,345.12. "But I think the (North Korea) situation is more serious than the Fed's policies".

In other commodities, the Brent crude oil spot price gained 0.14% to $58.61 per barrel as of 04:35 BST.

Speculators' net short bets on the USA dollar grew in the latest week to the highest total since January 2013.

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