Gold futures rose slightly higher, rebounding from Monday minor loss, while the US dollar was weakened by the recent economic data as investors raise concerns over speculations that the US Federal Reserve may begin to taper its bond-buying program earlier than expected.
The December delivery for the yellow metals were up 0.55% and trading at $1,400.80 per ounce at the time of writing, as it closed Monday’s trading session with $1,393.10 per ounce.
The US central bank’s $85 billion monthly bond-buying program weakened the US dollar by dragging the interest rate down, making the yellow metal an attractive hedge fund.
Gold Futures – Weak US dollar
The weaker-than-expected new homes sales data released last week along with the weak core durable goods orders dragged the greenback lower against major of its counterparts on Monday. Towards the end of the Asian trading session on Tuesday, the US dollar remained down against the Japanese yen, Australian dollar and the euro.
Analysts expected a 0.6% rise in July’s core durable goods orders, which dropped at the same rate, reports from the Census Bureau confirmed. The New orders for manufactured durable goods dropped 7.3%, falling from three monthly gains.
The U.S. Commerce Department reported the drop in the new homes sales for July as the highest level in over three years. Realtors closed new home contract rates at a low 13.4%, bringing down the total number of purchased new units to 394,000.
Gold Futures – Fed Doubts
The ongoing speculation over the tapering of the Federal Reserve’s (Fed) bond-buying program have stirred unsteadiness in the market and worries among investors in the recent months, as investors continue to focus on the Fed’s next meeting on September 17-18 for more clues.
Despite the recent better-than-expected economic data spurring predictions that the US central bank could begin to taper its stimulus program as early as September, investors are hoping the tapering of the bond-buying program would be pushed back to December with the release of the weak housing data.
Minutes from the FOMC August gathering, showed that policymakers from the Federal Open Market Committee (FOMC) were at ease with the tapering of the $85 billion monthly bond-buying program later this year, however the minutes did not indicate when exactly they intend to begin.
The second estimate for the second-quarter US gross domestic product is expected to be released on Thursday with predictions to show a rise of 2.3%.
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