Gold extends losses as Fed policymakers back more rate hikes

Gold prices are experiencing a selloff as Fed policymakers reiterate their hawkish stance on interest rate outlook. The US economy’s strength due to a tight labor market and strong consumer spending supports the Fed’s hawkish stance. The precious metal is trading at $1863 per ounce at the time of writing.

The US dollar attracts significant bids as strong consumer spending and tight labor market conditions may keep excess inflation persistent. The US labor market conditions seem to be strengthening, with weekly jobless claims remaining below consensus. The final reading of real GDP for the April-June quarter remained in line with the previous estimate and market expectation of 2.1% on an annualized basis.

Demand for Durable Goods remained upbeat as business spending on equipment increased, suggesting optimism among US firms is returning. The US Dollar and Treasury yields are consistently delivering more gains due to a resilient US economy.

Goldman Sachs warned that the likelihood of an impending government shutdown is at 90% and may commence from October 1. China’s real-estate sector woes continue, with trading in shares of China Evergrande group suspended amid deepening liquidation risks. Investors will focus on the US Core Personal Consumption Expenditure (PCE) Price Index data for August, which is expected to expand at a steady pace of 0.2% per month.