Gold price edges down to five-week low as dollar rallies

New York (June 20) Gold inched down to a five-week low on Tuesday as the dollar rose following hawkish

comments from an influential U.S. Federal Reserve official and dovish remarks from the Bank of England governor.

New York Fed President William Dudley said on Monday that labor market tightness should help drive up inflation,

reinforcing the message that recent weak data was unlikely to

derail plans to keep raising interest rates. [nL1N1JG0CX]

    The greenback <.DXY> had a further lift on Tuesday following

dovish comments from Bank of England Governor Mark Carney.

[nL8N1JH1BB]

    Also on Tuesday, Boston Fed President Eric Rosengren said

the era of low interest rates in the United States and elsewhere

posed financial stability risks. [nN9N1IS003]

    And voting member Chicago Fed President Charles Evans said

he was concerned about recent softness in inflation.

[nL1N1JH0UI]

    "It (another U.S. rate hike) is not entirely unlikely. Gold

from now to the end of the year could see slight drops,

especially if (on top of Fed hikes) the European Central Bank

starts tapering its bond buying program," said Natixis analyst

Bernard Dahdah.

    Spot gold <XAU=> was down 0.03 percent at $1,242.36 an ounce

by 2:35 p.m. EDT (1835 GMT), after touching a low of $1,241, the

weakest since May 17.

    U.S. gold futures <GCcv1> settled down 0.3 percent at

$1,243.50.

    "We're going to be living with interest rate increases for

quite some time," said George Milling-Stanley, head of Gold

Strategy at State Street Global Advisors, adding that he

expected "fairly regular" small rate hikes.

    "We haven't yet had a post-hike bounce but I believe we will

have it."

    Investors are pricing in a roughly 50 percent chance that

rates will be raised again by the year-end, according to CME

FedWatch. A strong dollar makes dollar-priced gold costlier for

non-U.S. investors.

    "The market attributes considerable weight to Dudley's

words, as he represents the majority opinion of the Federal Open

Markets Committee," said Commerzbank in a note.

    In the wider markets, oil prices fell to seven-month lows

and dragged global equities off all-time highs, limiting losses

in gold which is seen as an alternative investment to volatile

stocks.

    "The next key level of support sits around $1,240, with a

broad extension to the 200-day moving average around $1,237,"

MKS PAMP trader Sam Laughlin said in a note.

    Among other metals, spot palladium <XPD=> traded up 1.5 at

$873.20 per ounce, and platinum <XPT=> slipped 0.6 percent to

$916.95.

    Silver <XAG=> turned up 0.1 percent to $16.47, having

earlier touched $16.37, its weakest since May 12.

Source: Nasdaq