Gold Prices Lose Traction as US Rate-Hike Bets Grow

Gold prices edged lower Tuesday, weighed down by a stronger dollar and growing expectations for higher US interest rates.

Gold for February delivery fell as much as 0.9% through the early morning. It was last seen down $3.80, or 0.3%, at $1,190.00 a troy ounce at 4:59 pm ET.

The futures price staged a solid recovery Monday, reaching an intraday high of $1,200 a troy ounce. Gold’s uptrend continues to be limited by a stronger US dollar, which has been supported by expectations of higher interest rates as soon as next month.

The dollar index, which tracks the greenback against a basket of other major currencies, was up as much as 0.3% Tuesday. It settled down 0.4% at 100.91. The index reached a new 14-year high last week.

Dollar-denominated gold becomes less affordable to foreign investors when the greenback rises. The month-long rally in the dollar has sent bullion tumbling to more than nine-month lows. Further losses could be on the radar should the Federal Reserve hike rates in December as expected.

Federal Funds futures rates, which have long been used to express the market’s views on Us monetary policy, imply a more than 98% chance of a rate increase next month.

Rallying stock markets have also weighed on gold and other risk-off assets. The S&P 500, Dow Jones and Nasdaq set consecutive record highs last week, as investors continued to cheer Donald Trump’s plan to stimulate the economy through infrastructure spending, deregulation and corporate tax cuts.

US stocks bounced back on Tuesday from a soft start to the week, with the S&P 500 finishing 0.2% higher.

In economic data, US third quarter GDP growth was revised up to 3.2% year-over-year, up from a preliminary estimate of 2.9%, the Commerce Department reported Tuesday. That was the fastest acceleration since the third quarter of 2014. Economists had forecast an upward revision to 3%. The economy is expected to gather strength in the final stretch of 2016, invoking greater confidence in the health of the recovery.

Comex Gold Futures (February 2017)

gold

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Sam Bourgi

Sam Bourgi is a financial market analyst for economiccalendar.com. He has more than six years of progressive experience in economic and financial analysis, research consulting and sectoral analysis. As a published author in government, peer-reviewed, online and industry sources, he has developed a fundamental approach to the financial markets with a broad focus on stock indices, commodities and the technology sector. He earned his Bachelor’s Degree from the University of Windsor and Master’s degree from McMaster University.

Indices

NamePrice($)CommentChange($)Change %
S&P 5002,215+2.29+0.10%
NASDAQ5,331-2.24-0.04%
NYSE10,995+24.68+0.23%
FTSE 1006,891.24+111.40+1.64%
DAX10,977.18+201.86+1.87%
CAC 404,685.78+53.84+1.16%
EURONEXT 100897.64+6.48+0.73%
Nikkei 22518,496.69+136.15+0.74%
HANG SENG INDEX22,800.92+125.77+0.55%

Commodities

NamePrice($)Change($)Change %Comment
Light Sweet Crude Oil Futures,D47.48-0.01-0.02%
Gold Dec 161,176.10+8.50+0.73%
Silver Dec 1617.10+0.36+2.15%
Copper Dec 162.62-0.05-1.82%