US Dollar Strength Weighs on Gold Futures
A firmer US dollar weighed on gold futures, causing them to close lower on Bursa Malaysia Derivatives. According to Quintex Intel global strategist Stephen Innes, the stronger dollar was driven by hawkish comments from US Federal Reserve officials, particularly Chicago Fed president Austan Goolsbee.
Goolsbee warned that supply shocks and strong spending could keep inflation persistent, making it less likely for the Fed to meet its 2.0 per cent inflation target. He stated that the path back to this target may not be painless.
Innes noted that markets are still trying to determine the Fed's interest rate path beyond year-end, with foreign exchange traders leaning towards a somewhat more hawkish outlook than previously expected. The selling of gold during the Asian session was unusual, as Asian markets had generally been stronger buyers of gold during periods of rising prices.
Innes attributed this shift in sentiment to optimism that the upcoming meeting between US President Donald Trump and Chinese President Xi Jinping could ease East-West geopolitical tensions. However, markets were less convinced that possible discussions between the US and Iran on the sidelines of the United Nations General Assembly would yield meaningful progress.