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Gold heads for weekly decline amid mixed signals from Fed officials

Gold heads for weekly decline amid mixed signals from Fed officials

Bloomberg – Gold is headed for its first weekly decline after four gains, traders said assess mixed signals from Federal Reserve officials about the size of the next interest rate hike and a stronger dollar.

Bullion falls to three-week low amid debate over whether the Fed will move ahead with smaller rate hikes. The St. Louis Fed’s James Bullard is leaning toward another 75 basis point hike, while Esther George struck a more cautious tone, saying the size of the hike is still up for debate.

Higher rates often undermine interest on gold, which does not earn interest. However, the metal has rebounded from levels near 16-month lows on promises that the Fed would be less aggressive in its tightening cycle, considering the headwinds for the US economy. slow down in the end.

The dollar’s revival has had a big impact on the precious metal, which was already seen profiting after hitting $1,800 an ounce recently, according to Craig Erlam, senior market analyst at Oanda Corp.

Traders Analyze Mixed Signals From Fedfd Officials

“It could be more difficult if the dollar continues to rise and yields no longer emerge,” Erlam said in a note.

Recent data shows the US labor market remains healthy as jobless claims fell for the first time in three weeks. This could leave the door open for the Federal Reserve to continue raising interest rates aggressively, although new monthly readings on inflation and employment ahead of the September meeting could influence the decision.

“The prospect of a further tightening of monetary policy and a stronger dollar continues to weigh on the gold price trend at least until the end of the year,” analysts at Commerzbank AG said in a note. “The Fed’s Jackson Hole conference at the end of next week could send additional signals in this direction.”

Spot gold fell 0.48% to 1,750 an ounce. Prices are down 2.8% this week. The Bloomberg dollar spot index rose 0.6%. Silver, platinum and palladium all fell.

Read more at Bloomberg.com

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