Gold Prices Decline in Asia on Investor Caution

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Gold prices decline in Asia as investors implement  caution on expectations of Fed rate hikes the approaching year and a likely stronger greenback.

On the Comex division of the New York Mercantile Exchange, delivery of gold in January dropped 0.23% to $1,140.05 a troy ounce. Silver futures plunged 0.13% to $16.068 a troy ounce, while copper futures dropped 0.24% to $2.496 a pound.

As the Bank of Japan held steady on Tuesday, as expected and indicated a little uptick in the economy.

Earlier, the Reserve Bank of Australia on Tuesday in the minutes of its recent board meeting stated “it is ready to lower the cash rate again, if needed, by assessing the benefits of lower interest rates with potential risks to household balance sheets.”

Suddenly, gold prices for February delivery established lower on a stronger greenback and residual sentiment on an expected three Fed rate hike in 2017. On Monday, Fed Chair Janet Yellen stated she sees wage development picking up and a strong job market for recent college graduates.

“While I expect workers will continue to face some challenges in the coming years, I believe, … that the job prospects and career opportunities for new graduates at this time are very good,” Yellen said in remarks prepared for the University of Baltimore’s Midyear Commencement.

Fed Chair Janet Yellen did not mention latest monetary policy or other economic conditions in her  statements that concentrated on the current situation of the job market facing the new graduates.

On Additional News

On Tuesday, crude oil prices floated weaker as investors taken profits on current gains led by plans for OPEC and non-OPEC producers to trim production by approximately 1.8 million barrels per day (bpd) and cast an eye on U.S. shale producers.

On the New York Mercantile Exchange, crude futures for February delivery drop 0.17% to $52.97 a barrel. Global benchmark Brent crude drops  0.27% to $54.88 a barrel on London’s Intercontinental Exchange.

Suddenly, crude prices dropped as U.S. oil production was poised to grow as American energy companies the previous week continued to add oil rigs, extending a seven-month drilling comeback sufficient to substitute planned production cuts by OPEC, Russia, and other producers early next year.

Delivery of Brent oil futures for February were down by 24 cents, or 0.4%, at $54.97 a barrel just before noon. U.S. West Texas Intermediate crude for January increase 6 cents, or 0.1%, to $51.96 per barrel.

“Implied U.S. output increases…will offset a significant portion of the planned OPEC production cuts especially since we don’t anticipate sustained strong compliance,” Jim Ritterbusch, president of the noted Chicago-based energy advisory firm Ritterbusch & Associates, said in a research memo to investors.

“While adherence to (OPEC) cutbacks could be quite high initially, we will be surprised by compliance much above 60% by the end of the first quarter as (U.S.) shale responds to a higher price environment.”

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