• Gold futures on the COMEX division of the New York Mercantile Exchange fell on Friday as the U.S. Federal Reserve Chairwoman Janet Yellen provided additional hints on a possible interest rate increase. The most active gold contract for April delivery fell 6.4 U.S. dollars, or 0.52 percent, to settle at 1,226.50 dollars per ounce.
• The market focused on Yellen's speech at the Executives' Club of Chicago, as she said that the March Federal Open Market Committee (FOMC) meeting may see action on the interest rate.
• Investors now believe the Fed may raise rates from 0.75 to 1.00 during the March FOMC meeting. According to the CME Group's Fedwatch tool, the current implied probability of a hike from 0.50 to at least 0.75 is at 82 percent at the March meeting and 75 percent for the May meeting, along with a nine percent chance of an increase to a 1.0 rate.
• The Fed's goal is to control inflation and promote employment. Analysts believe Fed intends to soak up some of the banks' 2.5 trillion U.S. dollars of excess reserves as the U.S. economy continues to recover. Banks become more willing to take risks in a bullish economy, and as a result could potentially release some of their excessive reserves, flooding the economy with cash, causing inflation, which the U.S. Federal Reserve seeks to control.
• Gold was put under pressure as a report released by the U.S.-based Institute for Supply Management showed its ISM non-manufacturing index increasing by 1.1 points during the month of February, a figure which was better-than-expected and dampened demand for the precious metal.
• Gold prices held steady early on Monday, supported by a weaker dollar, after falling to the lowest since in over two weeks in the previous session after the U.S. Federal Reserve signaled it would raise interest rates in March.
• Spot gold <XAU=> was little changed at $1,234.51 per ounce at 0050 GMT. The metal hit $1,222.51, the lowest since Feb. 15, in the previous session.
• Traders are looking to next week for the factory orders report on Monday, international trade report on Tuesday, weekly jobless claims report on Thursday, and big jobs report on Friday.
• “Gold tends to get weaker ahead of a Fed rate hike, but we see any correction as short-term weakness,” said Commerzbank analyst Eugen Weinberg, among those looking for a near-term decline.
“weak March seasonals, the Fed and U.S. dollar strength are all reasons to lighten up on gold in the week ahead,” said Adam Button, currency analyst with Forexlive.com.
• Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, commented that the gold market by now has already discounted a March rate hike by the Federal Reserve. “We may get further weakness next week, but after that gold should rebound,” he said. “So down next week.”
• Silver for May delivery dropped 0.8 cents, or 0.05 percent, to close at 17.74 dollars per ounce.
Reference: Xinhua, Kitco, Reuters
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