Investing.com - Gold prices stayed near the lowest level in around five weeks in European trade on Tuesday, as hawkish remarks made by an influential Federal Reserve official reinforced expectations for the Fed to keep raising interest rates.
Comex gold futures were at $1,248.89 a troy ounce by 4:35AM ET (0835GMT), up $2.20, or around 0.2%. Prices fell to $1,244.10 in overnight trade, a level not seen since May 17. Gold prices lost about $10.00, or 0.8%, on Monday.
Also on the Comex, silver futures were up 7.8 cents, or roughly 0.5%, to $16.58 a troy ounce, after hitting its lowest since May 18 at $16.44.
New York Fed Chief William Dudley gave an upbeat assessment of the economy on Monday and warned against the central bank taking a pause in the tightening cycle.
In a business roundtable held in Plattsburg, New York, Dudley said U.S. inflation is a bit low but should rise alongside wages as the labor market continues to improve, allowing the Fed to continue gradually tightening U.S. monetary policy.
The remarks echoed similar comments made by Fed Chair Janet Yellen in last week’s press conference after the central bank hiked rates for the second time this year.
Chicago Fed President Charles Evans however later said the Fed should move slowly to raise rates and trim its portfolio due to soft inflation.
The U.S. central bank last week raised interest rates as widely expected and maintained plans to go ahead with another rate hike by year-end. The Fed also provided greater detail about how it plans to reduce its massive $4.5 trillion balance sheet.
Despite the Fed's relatively hawkish message, market players remained doubtful over the central bank's ability to raise rates as much as it would like before the end of the year due to a recent run of disappointing U.S. economic data.
Futures traders are pricing in around a 20% chance of a hike at the Fed's September meeting, according to Investing.com’s Fed Rate Monitor Tool. Odds of a December increase was seen at about 40%.
Market players will focus on a pair of Federal Reserve speakers Tuesday, as they look for more clues on future monetary policy moves.
Boston Fed President Eric Rosengren speaks at 8:15AM ET at the DNB-Riksbank Macroprudential Conference Series meeting in Amsterdam. Dallas Fed President Robert Kaplan will also speak in San Francisco at the Commonwealth Club of California.
Fed Vice Chair Stanley Fischer did not address the outlook for U.S. monetary policy or the economy when he spoke in Amsterdam earlier in the day.
Among other precious metals, platinum was little changed at $928.05, while palladium tacked on 0.5% to $859.80 an ounce.