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Gold futures trade modestly higher after Fischer comments

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Investing.com – Gold prices traded modestly higher on Monday, after Federal Reserve Governor Stanley Fischer said that the Fed is concerned about low inflation and won’t start to raise rates before it sees inflation returning to more normal levels.

Fischer added that a large part of the decline of inflation is temporary and has to do with the drop in the price of oil and raw materials.

for December delivery on the Comex division of the New York Mercantile Exchange inched up 80 cents, or 0.08%, to trade at $1,094.90 a troy ounce during U.S. morning hours.

On Friday, gold fell to $1,081.40 before recovering to end the session at $1,094.10, up $4.00, or 0.37%, as traders mulled the timing of a Federal Reserve rate hike following the release of solid U.S. nonfarm payrolls data.

The Labor Department reported that the U.S. economy added last month, slightly lower than forecasts for an increase of 223,000, but still consistent with strong employment growth.

The remained unchanged at a seven-year low of 5.3%, in line with expectations.

, a component of the jobs report that the Federal Reserve has said must rise, ticked up 0.2%, also matching forecasts after stalling in the previous month.

The data did little to alter expectations for a September rate increase by the Federal Reserve, but it tempered speculation for multiple rate hikes before the end of the year.

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Gold fell to a five-and-a-half year low of $1,072.30 on July 24 amid speculation the Federal Reserve will raise interest rates in September for the first time since 2006.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.15% at 97.82 early Monday, not far from last week’s three-month highs of 98.42.

The greenback has been boosted recently by expectations that the improving U.S. economy will prompt the Federal Reserve to raise short term interest rates as early as September.

Elsewhere in metals trading, copper prices bounced off a six-year low on Monday, as a recent batch of disappointing Chinese economic data fueled speculation policymakers in Beijing will have to introduce further stimulus measures to boost growth.

for September delivery on the Comex division of the New York Mercantile Exchange inched up 1.1 cents, or 0.48%, to trade at $2.344 a pound during afternoon morning hours in New York.

On Friday, copper tumbled to $2.313, a level not seen since June 2009, before ending at $2.332, down 0.8 cents, or 0.36%. Copper prices lost 2.3 cents, or 1.31%, last week, the sixth consecutive weekly decline, amid growing concerns over the health of China’s economy.

Government data released on Sunday showed that Chinese fell by a more-than-expected 5.4% in July, the 40th straight monthly decline and the worst reading since October 2009.

On Saturday, data showed that Chinese slumped 8.3% from a year earlier, far worse than forecasts for a decline of 1.0% and the biggest fall in four months. dropped 8.1%, broadly in line with expectations for a drop of 8.0%.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

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