Gold exchange traded funds are trading flat after Federal Reserve Chairwoman Janet Yellen skirted a definitive plan on monetary policy, leaving investors uncertain when the central bank will ultimately hike rates.
On Friday, the SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) dipped 0.1%, with Comex gold futures now trading at $1,323.4 per ounce.
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Yellen argued that concerns over economic growth are easing, which leaves a possibility of an interest-rate hike to be influenced by economic data, reports Stephanie Yang for the Wall Street Journal.
“In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal-funds rate has strengthened in recent months,” Yellen said in Jackson Hole, Wyoming.
[related_stories]While the remarks leave open the possibility of a September hike, the relatively muted gold reaction reveals the market’s skepticism over Fed policy changes any time soon.
“There’s just no way that the Fed is going to move. I just don’t see it,” Peter Hug, global trading director at Kitco Metals, told the WSJ. “Everything Janet Yellen said this morning indicates there’s been no change in Fed policy.”
Meanwhile, bullish traders pointed to economic uncertainty and negative interest rates around the world as further support for the precious metal. Moreover, the U.S. dollar dipped following Yellen’s comments, further supporting the commodities space.
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Gold, though, slipped into the red late Friday from trading positive earlier in the day after Federal Reserve Vice Chairman Stanley Fischer evinced a hawkish interpretation of Yellen’s remarks. Fischer told CNBC that Yellen’s comments were consistent with the possibility of two hikes this year.
“Fischer wants to make September still on the table,” Mark Kepner, managing director and equity trader at Themis Trading LLC, told Bloomberg. “He mentioned he’s not concerned about the low growth we have had the first six months. He’s saying growth is more a productivity and investment story. There are light volumes, lightly staffed desks and these moves can easily happen.”
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