Gold drops as bets fade for big Fed rate cut fade; eyes on trade talks
By Karthika Suresh Namboothiri (Reuters) - Gold prices dipped on Wednesday on signals the U.S. Federal Reserve would not make too steep a cut to interest rates next month, but still held ground above the key psychological $1,400 level
By Karthika Suresh Namboothiri
(Reuters) - Gold prices dipped on Wednesday on signals the U.S. Federal Reserve would not make too steep a cut to interest rates next month, but still held ground above the key psychological $1,400 level.
Spot gold shed 0.8% to $1,411.21 per ounce as of 1:56 p.m. EDT (1756 GMT), having fallen more than 1% earlier in the session.
Gold is on track to snap a six-session streak of gains and also its biggest one day percentage fall in more than two weeks.
U.S. gold futures settled 0.2% lower to $1,415.40.
"In gold, people were looking for a reason to sell some just because over the past week and a half gold has gone up exponentially. It had that break down and then kept on running," said Michael Matousek, head trader at U.S. Global Investors.
"You're seeing people playing the volatility."
In the previous session, prices had hit a six-year peak of $1,438.63 primarily on the back of heightened expectations that the Fed, like many counterparts around the world, would cut rates in acknowledgment of tepid economic stimulus and weak data.
Fed Chairman Jerome Powell stressed the central bank's independence from U.S. President Donald Trump, who is pushing for rate cuts. St. Louis Fed President James Bullard, considered one of the most dovish U.S. central bankers, surprised some investors by saying a 50 basis point cut in rates "would be overdone."
Following the statements from the Fed officials, gold sapped gains and has dropped nearly 2.6%. Lower interest rates reduce the opportunity cost of holding non-yielding gold, prompting investors to sell some.
The comments by Powell and Bullard have assisted in "enabling the dollar to find some much-needed support and undermining buck-denominated precious metals," Fawad Razaqzada, market analyst with Forex.com, wrote in a note, adding that a rebound in equities on trade talk hopes between U.S. and China has further pressured gold.
Trump is expected to meet with Chinese leader Xi Jinping at the G20 summit in Japan, where he said there is a possibility a deal could be struck, omitting the need for imposing more tariffs on goods from China.
"As time goes on, there are more uncertainties and that's what is keeping gold prices above $1,400," said an analyst based in New York.
"Prices should hold and continue to trend higher, unless there is some resolution on (U.S.-China) trade issues."
Among other precious metals, silver fell 0.3% to $15.31 per ounce, while platinum rose 0.8% to $812.50. Spot palladium was 0.4% higher at $1,534.00 per ounce.
(Reporting by Karthika Suresh Namboothiri in Bengaluru; Editing by Nick Zieminski)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.