US Dollar Rises, Gold Falls
Gold futures prices have fallen so far during Monday trading, contributing to a 1%+ decline for the month, as the Dollar Index appears close to closing out its best month in over a year. The index may have finally been pushed higher due to the Fed’s continuation of raising interest rates. Traders have pegged the probability of another rate hike during the June FOMC meeting at 92%. Additionally, the personal consumption expenditure inflation gauge reached the Fed’s target for the first time in over 12 months; something that may signal a faster-than-expected increase in U.S. interest rates. Generally, raising interest rates is seen as being supportive for the dollar, which conversely tends to put downward pressure on the ‘safe haven’ assets such as gold.
This week’s FOMC statement may give traders clues as to the direction & frequency of additional rate hikes to come in 2018.