By Gina Lee
Investing.com – Gold was down on Tuesday morning in Asia, remaining close to the one-week low hut during the previous session and is set for its worst month since 2016. A strengthening dollar and concerns over whether the U.S. Federal Reserve would tighten its monetary policy sooner than expected also weighed on the yellow metal.
were down 0.37% to $1,774.15 by 12:18 AM ET (4:18 AM GMT), after hitting its lowest level since Jun. 21 on Monday.
Confusion over the Fed’s policy outlook remains almost two weeks after a sudden hawkish turn in its latest policy decision spooked investors. This has in turn contributed to the listless trading seen in the gold market, according to ED&F Man Capital Markets analyst Edward Meir.
Some Fed officials stuck to this hawkish tone, with Fed Bank of Richmond President saying that the central bank has made “substantial further progress” towards its inflation goal in order to begin asset tapering.
The , which usually moves inversely to gold, inched up to hover below a two-month high on Monday.
However, “the dollar will start to weaken again, because the landscape is clear on the rate hike front for at least another 18 months to two years,” said Meir.
Other investors also expected gold to continue its downward trend.
“Although having rebounded from a selloff two weeks ago, gold has continued to trade below its 100-day moving average level,” OCBC said in a note.
“We expect gold to resume its downward trend this week as risk sentiment firms and markets continue to look towards the prospects of tightening monetary conditions from the Fed,” the note added.
However, optimism remains in some segments of the market.
“Gold is starting to find support here at the $1,775 level… we are starting to see investors moving back into metals on these lower prices now, as the Fed’s more hawkish shift seems to be priced in,” Guardian Gold Australia business development manager John Feeney told Bloomberg.
In other precious metals, silver eased 0.4%, palladium edged down 0.2% and platinum inched down 0.1%.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.