Gold falls as rate rise expectations grow (again)

The US dollar stretched to a three week high as traders renewed expectations of an interest rate rise after some bullish comments from Fed officials at the end of last week
gold bars
A solid US jobs report at the end of the week will likely weigh on gold

Gold eased backwards on Tuesday as traders assessed a stronger chance of a rise in interest rates after recent comments from the Federal Reserve.

Fed chair Janet Yellen said last week that the case for higher rates was strengthening, although any decision would be largely dependent on what upcoming data suggests about the US economy.

Vice chair Stanley Fischer even suggested on Friday that a hike could come as soon as next month.

Traders are already looking towards the monthly US job report due at the end of this week as the next major catalyst in gold prices.

A healthy jobs report will likely add more weight to the argument to increase interest rates.

“We believe there is an 80% chance that the Fed will increase the interest rate one more time this year,” said ThinkMarkets’ chief market analyst Naeem Aslam.

Mitsubishi analyst Jonathan Butler added: “It looks as though we’re going to see another pretty solid month of jobs gains, and that should mean that there’s a return [of expectations for] a September rise…or more realistically, a December rate rise.”

“That should weigh on gold,” Butler said.

The precious metal is particularly sensitive to a rise in rates as it increases the opportunity cost of holding non-yielding commodities such as bullion.

A hike would also bolster the US dollar, which the yellow metal is denominated in.

Shortly after UK market close, gold was down us$6 to US$1,317, silver was down 21c to US$18.62, while platinum was also down US$19 to trade at US$1,055.

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You understand that the Company receives either monetary or securities compensation for our services. We stand to benefit from any volume this write-up may generate.

You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Copyright ©, 2018. All Rights Reserved - Proactive Investors North America Inc., Proactive Investors LLC

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated.