Gold Hits Multi-month Highs Near $1170

Predictions and bets about the interest rates in the USA rising this year and in turn, boosting the opportunity cost of purchasing and holding gold while helping dollar further, pushed gold prices to five and a half year lows in July.

The most active gold contract for December delivery added $8.6, or 0.74 percent, to settle at $1,164.50 per ounce, Xinhua reported.

But both Yellen and her right-hand man, Vice Chairman Stanley Fischer, have said they expect conditions to warrant an interest-rate hike this year. Gold has rallied almost 5 percent since a surprisingly weak USA nonfarm payrolls report on October 2 prompted the market to shift expectations of a Fed rate hike to 2016. It hit an intraday high of $1,169.00 earlier in the session.

Lockhart told his audience of university economists that China’s slowdown shouldn’t directly have much of an impact on USA growth, though its effect on other countries’ growth could lead to a larger impact on the domestic economy.

Following the speech, Mr. Evans said he can envision a series of three separate quarter-point rate increases in 2016, and reiterated that he thinks any move should be gradual.

However, comments from Fed officials signalling that the US central bank was in no hurry to raise rates did not offset the profit taking on Tuesday. Yet Treasury rules don’t permit auctioning new debt at negative rates, a phenomenon seen elsewhere in the world at times of heightened demand that means investors pay the government to hold their cash. The U.S. dollar index is down 0.15 percent to 94.74 so far on Monday.

It will be hard for the Federal Reserve to switch gears after only one month of additional data and raise rates at its October meeting, St. Louis Fed President James Bullard said on Tuesday.

“He added that “… considerable uncertainties …” surrounded the USA economic outlook, particularly the fetter on exports from a slowing pace of global growth, declining investment caused by the decline in oil prices and the disappointing recent drop in United States jobs growth.

The eight regional banks that requested a hike want to normalize the spread between the discount rate governing Fed lending to banks and the overnight federal funds rate, which is the central bank’s primary economic lever. With inflation falling into negative territory, real wage growth in the U.K.is the highest it has been since before the financial crisis.