Gold edges higher but heads for monthly drop in August

Carla Harmon
August 31, 2016

USA gold futures were flat at $1,316.50. "The factors that are contributing to the strong cyclical and secular United States dollar outlook remain", including economic growth and the nation's divergent monetary policy from other central banks. The S&P 500 index rose 0.5% Monday, while the Dow average ended 0.6% higher. Futures for the Nasdaq-100 index were down 9.75 points, or 0.2%, to 4,783.50, as Apple weighed on the tech sector.

Fed chair Janet Yellen's remarks Friday were "considered to be relatively hawkish", said Thu Lan Nguyen, a foreign-exchange strategist at Commerzbank AG in Frankfurt. Investors also paid close attention to an interview that same day with Fed Vice Chairman Stanley Fischer who told CNBC in an interview that Yellen's speech was "consistent" with possibly two rate hikes this year.

The dollar also hit three-week highs against the euro, after data on Wednesday showed that euro zone inflation was stable in August, against expectations of a slight rise, piling more pressure on the European Central Bank to act. Still, some traders argue investors are reassured by signs that the world's largest economy is robust, particularly given further rate rises are expected to be gradual.

"The economy is doing well, the labor market is still doing well, there's reasons to think (interest) rates have bottomed and that is good for financials", said Paul Zemsky, chief investment officer, Multi-Asset Strategies and Solutions at Voya Investment Management in NY.


The prospect of a rate increase pushed up banking shares.

Hershey dropped almost 11.3 percent to $99.06 after Mondelez announced on Monday it was no longer pursuing an acquisition.

Consumer shares were among the biggest decliners.

Hershey fell $12.02, or 11%, to $99.65 after Mondelez International ended its pursuit of the chocolatier Monday.


Abercrombie & Fitch plunged 20 percent after the apparel retailer said it no longer expects comparable sales to improve this year.

Oil prices fell modestly amid rising doubts about the potential for a meeting between OPEC producers and Russian Federation in Algeria next month to take action to support crude prices by stabilizing, if not reducing, output. Interest rates have been cut below zero and free loans offered to banks. Spot gold was up 0.2 percent at $1,313.15 an ounce at 1140 GMT, having slipped by 1 percent in the previous session to touch a two-month low of $1,308.65.

Stocks in Asia mostly rose Tuesday, with Australia's S&P/ASX 200 up 0.2% and Hong Kong's Hang Seng Index climbing 0.9%. An earlier version of this article misstated the price.


Other reports by iNewsToday

FOLLOW OUR NEWSPAPER