The Daily Market Report: Gold Retreats on Yellen’s More-Hawkish Tenor

30-Mar (USAGOLD) — Gold starts the week on a defensive note, weighed by renewed uncertainty about the timing of the Fed’s next move on interest rates. This uncertainty has also lifted the dollar and prompted some profit taking in the yellow metal.

Speaking on monetary policy last Friday, Fed chair Yellen said that the long-awaited lift-off “may well be warranted later this year.” This of course came with the usual caveats about data dependence and such, so there wasn’t really a shift from the tenor that was perceived as dovish two-weeks ago.

At this point, it seems like guidance is designed to confuse investors and keep them on their heels. The data are predominantly weak and deflationary pressures remain evident. PCE for February came out this morning at a mere +0.1%, below expectations of +0.3%, versus -0.2% in January.

In recent weeks those rate hike expectations have shifted from March, to June and now to September or later. Unless there is a marked turnaround in growth and inflation expectations, I maintain a rate hike in 2015 is unlikely. Even if that first rate hike comes, the second one is likely to be a long way down the road.