Gold edged lower on Wednesday morning as the dollar strengthened, even amid concerns over US President Donald Trump's move to take over control of the Federal Reserve Board, which continues to encourage safe-haven asset purchases.

December gold last traded down US$4.00 at US$3,429.00, down from its highest level since August 8.

Trump said on Monday he would fire Federal Reserve Chair Lisa Cook, as he continues to pressure the central bank to lower interest rates despite rising inflation. Cook was appointed to the Fed Board by Joe Biden and is the first African-American woman to hold the position. Trump accused Cook of making false statements on a mortgage application.

Cook, however, denied Trump's right to fire her and on Tuesday said she would sue the president, saying he had no legal basis under US law to take such action. However, the president's efforts have raised concerns about the independence of the central bank, which sets US monetary policy.

Gold's support was driven by concerns over the Fed's independence after Trump redoubled his efforts to oust Lisa Cook. "If successful, Trump would secure a majority on the Board of Governors, supporting his interest rate cut agenda, despite ongoing concerns about stubborn and rising inflation," Saxo Bank noted.

The president's move comes ahead of Friday's release of the July Personal Consumption Expenditures Index, the Fed's preferred inflation measure. The report is expected to show the index unchanged from June at a 2.6% annualized rate, according to the FactSet consensus estimate, remaining above the central bank's 2% target.

The dollar strengthened early in the session, with the ICE dollar index last seen up 0.4 point at 98.62. US Treasury yields were also higher, with the two-year US Treasury last seen yielding 3.66%, up 1.8 basis points, while the 10-year Treasury yield rose 1.8 points to 4.286%. (alg)

Source: MT Newswires