Investing.com - Gold prices fell in Asia on Friday after Fed Chair Janet Yellen said that an interest rate hike this year is still very much on the cards.
Yellen said she anticipates that it will be appropriate to raise short-term interest rates by the end of the year.
In prepared remarks for a speech at the University of Massachussetts-Amherst, Yellen emphasized that most of her colleagues will likely support raising the target range for the Federal Funds Rate at some point this year. Yellen's stance represents a stark contrast from her position last week when the FOMC only disclosed that 13 of 17 of its members were in favor of raising rates this year. Yellen had not personally associated herself with a rate hike since July.
Following the FOMC's July meeting, China rattled global markets by devaluing the yuan in an effort to stimulate its flagging economy. Earlier this week, a preliminary reading of China's factory activity in September slumped to its lowest level in more than six years.
On the Comex division of the New York Mercantile Exchange, gold for December delivery dropped 0.38% to 1.149.40 a troy ounce, while silver for December delivery eased 0.36% to 15.075 a troy ounce.
Copper for December delivery fell 0.12% to $2.302 a pound.
Overnight, gold futures surged more than $20 an ounce as weak economic data weighed on the dollar, ahead of Janet Yellen's first public appearance on Thursday night since the Federal Reserve held short-term interest rates at its current near-zero level last week.
On Thursday morning, the U.S. Department of Commerce said new orders for manufactured durable goods in August decreased $4.8 billion or 2.0% to $236.3 billion. Following two months of gains, analysts expected durable good orders to fall by 2% last month. Weakness in aircraft orders weighed heavily on the reading, plummeting by 12% in August. When transportation orders were discounted, durable goods remained unchanged from its July level.
Separately, the Kansas City Fed said manufacturing activity in its region for September fell at a comparable rate to the previous month, underscoring export weakness from a stronger dollar and lower production in the energy sector due to lower crude prices. The Kansas City Manufacturing Index produced a reading of minus-8 in September, improving only slightly from an August reading of minus-9.
Initial jobless claims, however, remained near record-lows after ticking up by only 3,000 for the week ending on Sept. 12 to 267,000. Analysts expected jobless claims to fall in a range between 269,000 to 280,000. Continuing claims, meanwhile, fell to 2.242 million, down by 25,000 in comparison with the sample week from August. The Federal Open Market Committee is expected to keep a close eye on slack in the labor market when the September national employment report is released in two weeks. While average hourly earnings in August inched up by 0.3%, real or inflation-adjusted wages remain near 2009 levels during the recession.
Nearly a decade has passed since the Fed since hiked short-term interest rates. Gold, which is not attached to interest rates or dividends, struggles to compete with high-yield bearing assets in periods of rising rates.