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Gold flat as market awaits Fed chair’s speech

Published: 11:06 06 Jun 2016 EDT

A photo of Janet Yellen, chair of the Federal Reserve

Gold surged on the jobs number Friday and was higher again on Monday, briefly touching US$1,248 an ounce before easing back.

Indeed, Friday was the metal’s largest one-day gain in nearly four months, as US job creation figures were much worse than originally estimated.

At her speech in Philadelphia this evening, investors will be looking for indications from Yellen about the Fed’s next rate move.

The poor figures sent market expectations of a Fed rate hike in June tumbling to just 4%, down from 22%.

“The May US labour market was the exact type of jobs report that could that could upend Federal Reserve policymakers' hopes of raising rates in June,” says Christopher Vecchio, currency analyst at DailyFX.

“Remember in January when the FOMC (Federal Open Market Committee) was suggesting it was still going to raise rates four times this year? That was an odd notion then, and it is outright laughable now.”

That the Fed may hold off from pushing up interest rates until the autumn at the earliest is good news for gold investors.

An interest rate rise would see the dollar bolstered, as well as increasing the opportunity-cost of holding non-yielding commodities such as gold.

 

Nord Gold begins construction of US$250mln mine

Meanwhile in a further sign of some confidence returning to the sector, miner NordGold has started construction on its large-scale Gross mine in Yakutia, Russia.

The firm says that the mine will require around US$250mln worth of investment during its construction, with NordGold footing around half of that.

The low-cost, large scale project – with a mine life of 17 years – is expected to produce around 230,000oz of gold each year.

The company estimates that the first gold will be poured in the first quarter of 2018.

At UK market close, gold was up US$1 to US$1,245, silver was up 2c to US$16.40, while platinum was US$3 higher at US$986.

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