Gold prices[1] fall as Fed’s Brainard, Philly Fed data stoke rate hike bets Crude oil prices[2] weighed down by US Dollar[3] rise, overall risk aversion OPEC+ ministers’ meeting, comments from Fed’s Evans on tap ahead The outlook for US monetary policy was the central object of speculation across financial markets Thursday. A fiercely hawkish speech from typically dovish Fed Governor Lael Brainard stoked an upshift in priced-in 2019 rate hike bets while the yield curve steepened, with the spread between rates on 10- and 2-year Treasury bonds rising by the most in over two months. Brainard spoke ominously of “building cycle pressures” that she expects will be reinforced by fiscal stimulus, implying a pickup in inflation. She also worried aloud about “elevated risk” from stretched asset valuations and business leverage levels, warning against “complacency” about vulnerabilities. A steep rise in realized and expected price pressure in the Philadelphia Fedsurvey of businesses reinforced the point. Gold prices fell as rising rates drove up the US Dollar, undermining the appeal of anti-fiat and non-interest-bearing assets. Crude oil prices also suffered, weighed down by de-facto pressure from a stronger greenback and broad-based risk aversion across financial markets. Tellingly, the WTI benchmark fell alongside the bellwether S&P 500[4] stock index. FED COMMENTS STILL IN FOCUS, OPEC MINISTERS TO MEET Looking ahead, Fed-speak remains in focus as comments from Chicago Fed President Charles Evans – another prominent dove – cross the wires. If his rhetoric echoes Brainard’s hawkish pivot, a repeat of yesterday’s trading patterns may be in store.

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