Tight US labor market should push inflation higher -Fed’s Dudley

Tight US labor market should push inflation higher -Fed's Dudley

Gold futures fell Monday, extending recent losses as the dollar strengthened on hawkish comments from a Federal Reserve official.

Weighing on gold is a drop in holdings of physically backed exchange traded funds (ETFs) to 55.231-million ounces from 55.654-million ounces last Wednesday, when the Fed raised rates and pushed the dollar index to two-week highs. But its rally was tempered by Friday’s weaker-than-expected housing and consumer sentiment data.

New York Fed President William Dudley is due to take part in a roundtable with local business leaders in Plattsburgh, New York.

“My view is that Dudley won’t sound too dovish, and thus allow the dollar’s gradual rise to resume”.

Asked about a so-called flattening of yields in the bond market, which suggest investors are skeptical that this Fed policy-tightening cycle will last much longer, Dudley said pausing policy now could raise the risk of inflation surging and hurting the economy.

Retailers in Europe, up 0.8 percent, and the USA, up 0.7 percent, recouped some losses suffered in the wake of news on Friday of Amazon’s $13.7 billion deal to buy upscale grocer Whole Foods Market (NasdaqGS: WFM – news). It had set a two-week peak of 111.420 on Friday before its USA data-induced retreat.

The Dow Jones Industrial Average rose 97.13 points, or 0.45 percent, to 21,481.41, the S&P 500 gained 15.46 points, or 0.64 percent, to 2,448.61 and the Nasdaq Composite added 70.77 points, or 1.15 percent, to 6,222.53.

The greenback that slipped to 5-day lows of 1.2814 against the pound and 0.9696 against the franc bounced off to 1.2772 and 0.9729, respectively. It hardly budged on news that a van ploughed into worshippers leaving a London mosque on Monday, killing at least one person and injuring several.

The common currency showed little reaction to French President Emmanuel Macron winning a commanding majority in his country’s parliamentary election on Sunday.

But analysts say palladium’s gains of more than 25/oz so far in 2017 may not be justified given slowing vehicle sales.

Sterling has been confined to a narrow range over the past few days but faced potential volatility ahead as Britain begins its negotiations to exit the European Union on Monday.