Gold eases on stronger US Dollar

Fed Chair Janet Yellen is slated to speak on Friday.

An improving global economy and a solid USA recovery mean it will be “appropriate soon” for the Federal Reserve to raise US interest rates Fed Governor Lael Brainard said on Wednesday, adding an important voice to the chorus of officials signalling rates may rise as soon as mid-March.

New York Fed President William Dudley, a permanent voter on the US central bank’s open market committee, said the case for tightening monetary policy “has become a lot more compelling”.

She also reiterated that the pace of rate increases is likely to speed up over the next few years.

Various Fed officials suggested that the rise in inflation and the low 4.8% unemployment rate were evidence that the central bank is now close to achieving its dual mandates of maximum employment and stable prices.

Several other Fed officials in recent days have indicated the Fed’s policymaking committee is likely to raise its benchmark short-term rate at a March 14-15 meeting. He said he was confident that the Fed could keep the economy on a “sound footing” even as the Fed raises rates.

According to Aberdeen Asset Management investment manager Luke Bartholomew the comments made by Dudley were particularly significant and indicate a rate rise is imminent.

The Fed has long said it expects three rate increases this year. But until as recently as this week, Wall Street saw a rate hike as far likelier in June.

“With Brainard flying the dove’s coup, she has tipped the scales in overwhelming favour of a rate hike as the market now views March as fait accompli”.

The market will closely scrutinise Yellen’s speech as to clues on a probable rate hike.

“However, if they hold on their interest rate hike, then we may see a massive sell-off for the dollar and huge upward moves for the gold price”, opined Aslam in a statement.

To Ray Attrill, global co-head of FX strategy at the National Australia Bank, they were also the main talking points for financial markets on Wednesday, rather than anything that was said by Trump. “On the whole, the prospects for further moderate economic growth look encouraging”, her prepared remarks said. The supervisory board of PSA approved the purchase of the unit and an announcement was expected Monday, a source close the transaction told AFP. Zandi says the US economy is on “solid ground” and raising rates now makes it less likely that inflation will spike and require more drastic action in the future.

Inflation data on Wednesday showed consumer prices inJanuary posted their biggest monthly gain in four years and leftthe 12-month increase in prices at 1.9 percent, just below theFed’s 2 percent target.

Some analysts said Trump’s speech, while lacking details on economic policies, did seem positive after a turbulent month in office. Stocks appeared unfazed by a lack of fiscal policy clarity as well as commentary from United States central bank officials suggesting a rate rise was imminent.

“The story has been an aggressive reprising of the March Fed hike”.