Published: Thu, August 24, 2017
Economy | By Melissa Porter

Gold futures fall on stronger U.S. dollar

Gold futures fall on stronger U.S. dollar

Germany's 10-year Bund yield was up just 1 basis point at 0.41 percent - within sight of a one-week low hit on Monday. But Chinese equities fell modestly on a 5% slide in metals futures and Australia's benchmark turned lower as Commonwealth Bank of Australia faced a potential shareholder lawsuit in the wake of a government money-laundering case. The S&P 500 dipped 0.77 points, or 0.03 per cent, to 2,424.78. But the Shanghai Composite Index edged down 0.1 percent to 3,287.70.

This is the kind of price action that we have been seeing over the last few days with the lack of fundamental drivers in the market and we believe that this kind of ranging would continue to happen atleast until the market listens to what Draghi has to say.

The Australian dollar moved back above US79 cents and closed the week at 0.7931. The governor may instead look to "downplay as much as possible the effects of monetary policy normalisation in order to keep financial markets calm", he said.

"But it's certainly helping the mining sector, which has been beleaguered for quite some time".

The geopolitical fears also helped boost the Japanese yen against the dollar. This time it was chief strategist Steve Bannon, a driving force behind his nationalist and anti-globalization agenda.

-The Japanese yen increased 0.4 percent to 108.82 per dollar, the strongest in nearly four months on a closing basis.

The euro was also in the doldrums, stuck at $1.1760 as it consolidated last week's biggest weekly decline in more than two months.

President Mario Draghi gave little indication about the next steps for monetary policy in the euro zone during a speech on Wednesday ahead of a key meeting between central bankers.

Draghi won't deliver a new policy message at the Jackson Hole conference, according to a Reuters report based on sources familiar with the situation. "The market spotlight will likely focus on Yellen, given the generally low USA inflation environment and the likelihood of Fed balance sheet reduction occurring relatively soon".

Comments last week from Fed officials suggested buoyant US stocks, low long-term bond yields and the recently weaker dollar are have crimped the central bank's intentions of raising interest rates again this year even in the face of cooler inflation.

The pound lost ground on Tuesday, falling to seven year lows against the euro ahead of the Federal Reserve's Jackson Hole conference on Thursday. Oil held onto gains and the yen fell. USA crude futures fetched $48.64 per barrel, while Brent futures were down fractionally at $52.69 per barrel.

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