Gold Prices Sink Below $1,300 as Race for Fed Chair Heats Up
Investing.com - Gold prices were under pressure on Tuesday, sinking below the key $1,300-level as speculation mounted that the next head of the Federal Reserve will be more hawkish.
Comex gold futures fell by around 1% to reach a one-week low of $1,290.40 a troy ounce by 3:00AM ET (0700GMT).
The yellow metal climbed to its highest level since Sept. 26 at $1,308.40 on Monday, supported by safe-haven demand as conflict between Iraqi and Kurdish forces broke out near the oil-rich city of Kirkuk.
It then reversed gains to end the day lower as the U.S. dollar strengthened following a report that U.S. President Donald Trump was favoring Stanford economist John Taylor, seen as more hawkish than current Chair Janet Yellen, to head the Fed.
Trump is also due to meet with Yellen later in the week as part of his search for a new candidate for her position, a source familiar with plans for the meeting said.
Market watchers are also keeping an eye on current Fed Governor Jerome Powell and former Fed official Kevin Warsh as potential candidates to succeed Yellen when her term ends in February.
The U.S. dollar and bond yields pushed higher, dampening the appeal of bullion. The dollar index, which tracks the greenback's strength against a basket of six major currencies, rose to a one-week high of 93.37.
Interest rate futures are pricing in around a 90% chance of a December Fed rate hike according to Investing.com's Fed Rate Monitor Tool. The U.S. central bank has already raised rates twice this year.
Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion.
Elsewhere on the Comex, silver futures slumped 22.8 cents, or about 1.3%, to $17.14 a troy ounce. Among other precious metals, platinum dropped 1% to $932.30, while palladium dipped 0.3% to $973.15 an ounce.
Meanwhile, copper futures declined 2.2 cents, or 0.7%, to $3.217 a pound. Prices of the red metal rallied to their best level since Aug. 2014 in the last session, boosted by robust economic data from China, the world's top user of the red metal.
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