Gold stays below $1300/oz as dollar rises after hawkish Yellen comments

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As of late Wednesday morning, spot gold was around $1,286 an ounce.

Newly appointed Atlanta Federal Reserve Bank president Raphael Bostic also signalled a willingness to tighten monetary policy, saying there were more consistent signs of inflation.

The price action in the dollar and Treasury markets suggests that investors interpreted her comments to mean that soft inflation readings do not have a big bearing on Fed monetary policy.

The euro hit a more than one-month low as an ongoing dollar short squeeze and reaction to the German election encouraged investors to take profits on one of the best-performing currency trades this year. There has been a focus around the response of American football players towards the U.S. national anthem and more importantly the tensions between North Korea. The much-anticipated tax reform package is expected to be presented during a speech in Indianapolis, at 3 p.m. ET.

United States stocks also gained on the speech, while USA president Trump's address due Wednesday detailing planned U.S. tax cuts, was also supportive.

There were those who argued - like New York Fed president William Dudley - that normalisation should go ahead because the current low inflation environment is due to "temporary, idiosyncratic factors".

Stocks barely moved today as an early rally was snuffed out by a hawkish speech from Federal Reserve Chair Janet Yellen. US prices had rallied on Monday, with the gains spurred in part by a threat from Turkey's president to cut off oil exports from a Kurdish region of Iraq.

North Korean foreign minister compares Trump's threat to dogs barking
Earlier this month, North Korea also conducted its sixth and most powerful nuclear test, one the country said was a hydrogen bomb. The bombers, escorted by fighter jets, flew in worldwide airspace over waters east of North Korea , reported the New York Times .

Yellen admitted Tuesday that the Fed may have overstated the strength of the labor market and the rate of inflation.

US stocks traded mixed on Tuesday, as markets weighed a strong signal from Fed Chair Janet Yellen that interest rates will soon rise.

"The divergence between US and euro zone data surprises is closing rapidly and while the once popular dollar parity forecasts still look ridiculous, the euro looks past its peak", said Sean Maher, an independent macro-strategist based in London.

In Europe, the German 10-year government bond took a cue from the USA, rising more than 6 basis points to hit 0.464%.

Ten-year yields climbed seven basis points to an eight-week high of 2.30 percent, also pushed higher by the prospect of tax cuts that could increase federal borrowing, analysts said.

The Nikkei 225 index dipped 63.14 points, or 0.3%, to 20,267.05, despite the weaker yen as most automakers, financials and trading houses pulled back.

The Euro-to-Dollar rate pared a 0.68% loss overhanging from the London session to trade just 0.52% down at 1.1794. US crude stocks were reduced by 761,000 barrels last week, the American Petroleum Institute announced on Tuesday.