US gold futures for December delivery settled down $13.90, or 1.07 percent, at $1,287.80 per ounce. During yesterday's speech, Yellen said the Fed should continue with a steep rise in interest rates, adding that inflation may be weaker than the central bank's preliminary forecasts.
Emerging markets felt the brunt of Fed chairperson Janet Yellen's hawkish comments on Tuesday, with the rand, Turkish lira and Mexican peso coming under massive pressure, according to TreasuryOne. The benchmark Kospi dropped 1.75 points or 0.07 percent to 2,372.57. The Russell 2000 index of smaller-company stocks gained 4.91 points, or 0.3 percent, to a record 1,456.86. Yellen also said the Fed should take care not to raise rates too slowly.
-The MSCI All-Country World index fell 0.3 percent to the lowest in over two weeks. Key among current uncertainties are the forces driving inflation, which has remained low in recent years despite substantial improvement in labor market conditions.
Investors are also looking to a tax reform plan due to be announced on Wednesday by U.S. President Donald Trump and fellow Republicans that could boost growth and inflation.
Equity markets, which have benefited from low borrowing costs, anticipate a fourth rate hike in December, and possibly three more next year. U.S. new home sales eased to 560,000 in August from 580,000 in July. The world equity markets took this as a positive sign that a strengthening USA economy and rising inflation will help the other major industrialized countries' economic growth prospects, as well as reignite some wanted inflation.
As for other precious metals, silver for December's delivery fell 26.4 cents, or 1.54 percent, to close at $16.883 an ounce.
USA officials emphasized the urgency of attempts at diplomacy to ease tensions with North Korea on Tuesday, while the US stepped up sanctions amid an escalating war of words between Washington and Pyongyang. The euro was at $1.1756-1757, down from $1.1812-1813, and at ¥132.48-49, up from ¥132.01-02. The kiwi was moving sideways during the session near a 3-week low of $0.7200 as political uncertainty is weighing on the currency, with the leader of the opposition party saying that coalition agreements will not be made until October 7.
In energy markets, oil prices hit lower despite the EIA report showing that United States crude oil inventories declined by 1.846mn barrels the past week while analysts anticipated oil inventories to increase by 3.422m barrels. Economists had expected orders to climb by 1.0%.
Speculators' net short bets on the us dollar grew in the latest week to the highest total since January 2013.