Gold prices hoves near four-month low

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The interest rate forecast on federal funds is among the semi-annual monetary report by USA central bank to Congress.

According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$11.13 billion (US$364 million)-worth of shares on the main board, picking up large-cap electronics stocks, which sent the weighted index up 1.22 percent.

Nevertheless, we believe that since global key rates will rise very gradually from extremely depressed levels, their adverse effect on gold will be limited, especially since inflation in the U.S. and elsewhere remains low, even though the Fed believes that the strength of the employment market will ultimately feed through to inflation.

The FX markets are clearly on pause ahead of Janet Yellen testimony in front of Congress tomorrow, as well as news from BOC which holds its monthly policy meeting tomorrow as well.

USA dollar jumped to a two-month high against the yen the previous day.

On Monday data showed that exports from Germany, the biggest economy in Europe, increased stronger than was expected during May.

"So while it may not be coordinated communication, I do think there's been a change in rhetoric from central banks across the world - though the ECB is the central bank to watch in the second half of the year".

At a press conference last month, Yellen said the normalization of Fed's balance sheet could start "relatively soon" if the US economy evolves in line with their expectations.

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The ICE Dollar Index, which measures the dollar against a basket of six currencies, was 0.1% higher, at 96.13.

CURRENCIES: The dollar rose to 114.32 from 114.04 yen late Monday. It ended 0.54 percent higher on Monday, taking the year-to-date gains to 12.7 percent.

A rate rise from Canada's central would be its first interest rate rise in almost seven years.

Dollar bulls are banking on Yellen to retain her hawkish stance, emboldened by last Friday's relatively robust US non-farm jobs report."The main focus is whether Yellen makes it clear in Congress that the Fed intends to begin winding down quantitative easing".

Global benchmark Brent was up 0.2 percent at $46.76, following Friday's 2.9 percent slide.

Gold has come under renewed pressure in recent days, as investors recalibrated their outlook on US monetary policy in the light of recent economic data.

The report also noted that long-term nominal U.S. Treasury yields have declined and remained quite low by historical standards since the beginning of the year, largely reflecting "declines in inflation compensation" due to soft inflation data.