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    ‘Fedspeak’ on Rate Increases Send Gold Lower in Early Trading

    Gold prices were trading lower, and silver remained near-steady Wednesday after a Federal Reserve official refused to rule out future rate increases. Gold was down $19.41 at $2,340.48 while silver held even at around $32 on remarks Tuesday by Federal Reserve Bank of Minneapolis President Neel Kashkari, who left the door open to increases.“I don’t think anybody has totally taken rate increases off the table,” Kashkari said at an event in London. “I think the odds of us raising rates are quite low, but I don’t want to take anything off the table.”

    His remarks come amid a busy – and telling – week for U.S. economic data. On Thursday, reports on initial jobless claims, pending home sales, and GDP will be released. Even more significantly for traders, the government is expected to release data on personal income and inflation on Friday. Traders hope that the report will help shed more light on the timing of future rate cuts.

    Even though Kashkari emphasized the U.S. central bank’s overall restrictive policy stance on rates, he said he wasn’t yet convinced that measures to cut inflation have taken a foothold since the last meeting of the Federal Open Market Committee in March. Policymakers will have to take into account a stronger labor market and improving economy heading into their next meeting on June 11-12 in Washington.

    “I want to get all the data I can get before the next FOMC meeting before I reach any conclusions,” Kashkari added. He echoed that stance in an interview Tuesday with CNBC when he said he wanted to see “many more months” of positive inflation data before he was confident enough to recommend dialing back rates.

    The Fed interest rate of 5.25% – 5.50% is at a 23-year high, while  U.S. inflation sits at 3.4%, according to the Bureau of Labor Statistics. Even with easing inflation and a resilient economy, it’s still a gulf apart from the Federal Reserve’s 2% inflation objective.

    Disclaimer: All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of JM Bullion Inc. and should not be construed as financial advice.

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