Futures for the precious metal were slightly down on Tuesday, but hovered closed to the previous two-week peak amid market players’ doubts over the next Federal Reserve rate increase.
On the Comex division of the New York Mercantile Exchange, gold for August delivery slipped $2.95 or 0.24%, to trade at $1,244.45 a troy ounce by 06:53 GMT.
Previously, gold surged on Monday to $1,251.30, the highest since May 23, as investors had lower expectations for a rate rise in the summer.
In recent weeks, gold prices have been under pressure, dropping to a low of $1,199.00 on May 31 as hawkish sentiments from Fed officials as well as minutes of the Fed’s April policy meeting persuaded several analysts and investors that a rate rise in either June or July will take place.
Gold futures are still up almost 15% so far this 2016.
The yellow metal is sensitive to moves in US interest rates; a steady path to increased rates appears to be less of a threat to gold prices compared to a rapid string of raises.
Elsewhere on the Comex, July futures for silver sank 5.7 cents or 0.35%, to trade at $16.39 a troy ounce during morning hours in London. Meanwhile, copper futures shed 1.4 cents or 0.64%, to $2.104 a pound.
The US dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, dipped 0.1% at 93.93, near the prior session’s three-week lows of 93.74.
Uncertainty over the Fed’s Rate Hike
Fed Chair Janet Yellen, who spoke at the World Affairs Council of Philadelphia on Monday, stated that she was optimistic about the general US economic outlook and added that the Fed have plans to push interest rates higher. However, no indication on the timing of the said rate hikes has been dropped.
Prior to the May jobs report released late last week, the odds were almost at 60%.
According to Fed funds futures, rate hike expectations declined after Yellen’s comment. Chances for a July increase rate slid from 33% to 27% before Yellen’s speech on Monday.