Gold price only under moderate pressure after hawkish Fed comments

An interview in the Wall Street Journal with Atlanta Fed President Dennis Lockhart sparked a significant appreciation of the US dollar overnight, driving it to a two-week high against the euro. 

In the interview, Lockhart asserted that the US economy was ready for an interest rate hike, saying that the only thing that would prevent him from voting for a rate increase at the Fed's September meeting would be considerably poorer economic data. 

Lockhart has so far represented the average opinion of Fed members. 

"Accordingly, yesterday's interview is a strong indication that a rate hike will be forthcoming in September. The market responded by pricing in a rate hike in September with a likelihood of 50% for the first time this year", says Commerzbank. 

Against this backdrop, gold is still holding its own relatively well at just shy of $1,090 per troy ounce. In euro terms, the firm US currency has driven gold up to €1,000 per troy ounce. The gold price will remain under pressure until the first interest rate rise. 

"The price should climb again just as soon as the uncertainty over the timing diminishes", added Commerzbank .

Meanwhile, the outflows from the gold ETFs continue. After a good 70 tons were withdrawn in July, the highest monthly outflows since December 2013, a further 3.2 tons have already been withdrawn in August too.