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What’s next? – GOLD 22.02.18

Feb 22 2018, 01:59 PM (+06) | Fortfs.com

Gold prices were lower in early trading hours on Thursday, falling under pressure as the dollar continues its way and gets closer to a one-week high against major rivals.

On the Comex division of the New York Mercantile Exchange, gold futures were down 0.63 percent at $1.323.70 a troy ounce as of 07:30 GMT.

The dollar-denominated metal is sensitive to changes in the US currency. A stronger greenback makes the metal more expensive, less attractive for holders of foreign currencies.

The US dollar index, which measures the greenback against six major currencies, was trading 0.25 percent higher at 90.14 by the time of this writing.

The American currency was boosted by the latest monetary policy meeting minutes of the Federal Reserve, which were released in late trading hours on Wednesday.

The document solidified expectations that the US regulator is heading to a more aggressive stance on policy normalization, which means interest rates adjustments at a faster pace.

According to Fed funds tracked by CME Group’s FedWatch program, market participants are currently weighing an 85 percent probability of a 25 basis-point rate hike by March.

At the time, benchmark rates stand in a range between 1.25 and 1.50 percent. Federal Reserve policymakers have been mostly supportive of further hikes as labor market conditions continue to improve, as well as prospects for inflation.

Also contributing to the dollar’s strength were activity reports from the manufacturing and services sectors for February. The manufacturing PMI came in at 55.9, above 55.4 seen. The services PMI established at 55.9, outperforming an expected 55.9 reading.

Existing home sales for January came in at 5.38 million, down 3.2 percent. Analysts had estimated 5.61 million and a 0.9 percent build.

Ahead in the day, initial jobless claims are due as of 13:30 GMT. Traders will also be paying attention to a series of FOMC speakers, including Dudley at 15:00 GMT, Bostic at 17:10 GMT and Kaplan at 20:30 GMT.

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