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Gold Prices Snap Losing Streak After Dovish Fed Remarks

September 13, 2016 at 17:11 by Andrew Moran

You could describe the Federal Reserve‘s attitude as hawkish one day and dovish the next.

Gold prices have finally snapped their four-day losing streak. After dovish remarks from one Federal Reserve official pertaining to interest rates, gold finally presented gains for investors, which is the first time since September 6.

December gold futures increased $1.50, or 0.11%, to $1,327.10 per ounce at 16:40 GMT on Tuesday. Despite experiencing a tepid 0.8% weekly gain last week, the yellow metal has been putting forward losses due to the growing likelihood of a September rate hike.

Silver has been unable to join gold in its modest rally. December silver futures declined $0.05, or 0.29%, to $18.94 an ounce. For the past month, silver has not sustained any kind of continuous momentum.

The gains in gold on Tuesday were due to dovish comments from Fed Board Governor Lael Brainard.

Speaking in Chicago on Monday, Brainard requested the Federal Open Market Committee (FOMC) for prudence when it comes to interest rates later this month. She stated that the case for policy tightening “is less compelling,” alluding to global economic uncertainty and a paucity of inflation. Brainard ultimately believes the Fed should refrain from removing support for the US economy too soon.

A similar opinion was made on Monday when Minneapolis Fed President Neel Kashkari told CNBC that there is no urgency for the US central bank to raise rates.

Although the market is preparing for a rate hike during the September 20 and 21 meeting, recent comments from several Fed officials are not cohesive.

Gold prices did not edge higher than they could have on Tuesday after new positive economic data coming out of China. The world’s second-largest economy reported that industrial output grew 6.3% year-over-year, while retail sales beat expectations by expanding 10.6%. Also, fixed asset investment has jumped 8.1% since the start of 2016.

Due to further global monetary easing, weak global economic growth, and volatility in the global financial markets, the yellow metal has climbed 23% year-to-date.

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