Gold Slips On US Fed Rate Views

Gold fell slightly early Monday as hawkish comments from U.S. Federal Reserve officials late last week raised bets on a rate hike as early as September.

Fundamentals

* Spot gold had slipped nearly 0.2 per cent to $1,325.60 an ounce by 0120 GMT.

* U.S. gold futures dropped 0.3 per cent to $1,329 an ounce.

* The dollar index, which measures the greenback against a basket of currencies, was down 0.1 per cent at 95.219.

* The dollar began the week on the back foot on Monday as a bout of risk aversion underpinned the yen, though the U.S. currency garnered some support on renewed talk of a possible rate hike by the Federal Reserve as early as this month.

* A spate of Fed speakers kept hopes alive for a September rate hike, despite some recently disappointing economic data including only a modest rise in U.S. nonfarm payrolls.

* After Boston Federal Reserve President Eric Rosengren spoke on Friday, odds on a rate hike in September rose to 30 per cent probability from 24 per cent before his comments.

* The case for raising U.S. interest rates has strengthened in recent months, a top Federal Reserve official said on Friday, but long-term headwinds to economic growth mean the central bank will raise rates only very slowly.

* U.S. wholesale inventories were unchanged in July as previously reported and sales recorded their biggest drop in six months, suggesting a modest boost to third-quarter economic growth from inventory investment.

* Reports the Bank of Japan was considering ways to steepen the Japanese yield curve, along with speculation that central banks more generally were running short on fresh stimulus measures, slugged sovereign debt and risk appetite globally.

* Hedge funds and money managers hiked their net long position in COMEX gold contracts to a nine-week high in the week to Sept. 6, as they also raised a bullish stance in silver, U.S. Commodity Futures Trading Commission data showed on Friday.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 1.12 percent to 939.94 tonnes on Friday.

Market Report

* Asian shares slipped on Monday with investors rattled by rising bond yields and talk the Fed might be serious about lifting U.S. interest rates as early as next week.