Gold Lower as Fed Members Talk up Rate Hike Chances

Gold prices have fallen slightly deeper into negative territory Monday, following more relatively hawkish comments from a Federal Reserve president.

At an event in Atlanta, Georgia, Regional Fed President Dennis Lockhart said that he would encourage a “serious discussion” of a policy rate increase. The non-voting Fed members also said that he would not speculate on what the central bank would do in the next three meeting.

Although Lockhart is trying to remain neutral on monetary policy, he noted in his speech that the U.S. economy has enough momentum to achieve the U.S. central bank’s monetary policy objectives in the medium term.

“In its fundamentals, the economy seems to be chugging along, not stalling out,” he said. “I see full-year growth in 2016 coming in a little below 2 percent, just shy of the growth rate we’ve seen, on average, over the seven-plus years of recovery.”

On inflation, Lockhart said that although price pressures are still well below the Fed’s 2% target, but remains stable. He added that inflation will start to rise once slack in the labor market has been sufficiently reduced.

Minneapolis Fed President Neel Kashkari made slightly more dovish comments in an interview on CNBC. The non-voting member said that he didn’t want to speculate about the direction of short-term interest rates but added that the Fed has time to gauge the health of the economy and inflation, saying that growth of 2% “feels right.”

via Kitco

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza