Over the last 24 hours, Fed Chair Janet Yellen came out with a relatively hawkish outlook on monetary policy, stating that she still expects a rate hike “later this year,” that US economic prospects “generally appear solid,” and that the FOMC does not expect recent global financial developments to significantly affect policy.”
Gold sharply extended its gains for a second day on Thursday and more than made up the losses suffered earlier in the week. Though the metal was slightly lower at the time of this writing on Friday, it is still holding in the positive territory for the week and thus remains on course to post its second two-week rally since the second week of August.
At last week’s FOMC meeting, policy makers opted to leave interest rates at record lows and delivered what was deemed to be a fairly dovish message--lowering growth and inflation expectations and warning of heightened emerging market risk.
The U.S. dollar was gaining this morning on a stronger-than-expected GDP report, rising expectations of a Fed rate hike, and easing concerns about global growth. Second quarter GDP was up 3.9%, well ahead of consensus expectations of 3.7%.