Gold Prices Slip On Stronger Dollar, Potential Fed Moves

By Ira Iosebashvili 

        Gold prices edged lower Tuesday, weighed down by a stronger dollar and worries of a hawkish Federal Reserve.
        Gold for August delivery, the most actively traded contract, was recently down 0.2% at $1,094.70 a troy ounce on the Comex division of the New York Mercantile Exchange.
        The dollar rose against its peers Tuesday, as investors become increasingly convinced the Fed will raise interest rates in coming months on the back of solid U.S. economic data. A stronger dollar is bad news for gold, which is priced in the U.S. currency and becomes more expensive to foreign buyers when the greenback appreciates.
        The dollar was recently up 0.3% against the yen at Yen123.60. The euro was down 0.3% at $1.1050.
        Gold investors are also nervous that the Fed will give a more optimistic than expected view of the economy at the conclusion of its monetary policy meeting Wednesday. Fed Chairwoman Janet Yellen said earlier this month the central bank would likely raise rates in 2015 if the economic recovery continued apace. A hawkish statement from the Fed would cement investor expectations of a rate increase as early as September.
        The Fed meeting "is overshadowing the precious metals complex," Standard Bank analysts wrote in a note to investors. "There is still no consensus on whether the (Fed) will be ready to act at its September meeting."
        Expectations of a rate increase in coming months pushed the gold price to a five-year low last week. Gold, which pays its holders nothing, struggles to compete with yield-bearing investments when rates rise.
        Write to Ira Iosebashvili at ira.iosebashvili@wsj.com
        (END) Dow Jones Newswires

        July 28, 2015 10:59 ET (14:59 GMT)

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