Tags: gold | investors | rate hike | bulls

Gold Bulls Get a Wake Up Call as Rate-Hike Odds Surge

Gold Bulls Get a Wake Up Call as Rate-Hike Odds Surge

 (Getty/Michael Cizek)

Thursday, 02 March 2017 12:54 PM

Gold investors are waking up to the reality of an increasing probability that borrowing costs in the U.S. could rise this month.

Bullion futures fell for a third day as the odds that the Federal Reserve will boost interest rates this month jumped to 80 percent on Wednesday, from 52 percent a day earlier and 34 percent last week, according to Fed fund futures data compiled by Bloomberg. Higher rates curb the investment appeal of non-interest bearing gold, while boosting the dollar.

Gold, which rallied more than 8 percent this year, has been thrown into reverse amid a rapid rethink by investors as Fed officials signaled more willingness to consider a rate hike this month. The Fed’s preferred measure of consumer prices climbed 1.9 percent from a year earlier, just shy of its 2 percent target that was last met in April 2012, according to a government report on Wednesday.

The slump in gold prices “is due to a firmer U.S. dollar and significantly higher rate hike expectations in the U.S.,” Commerzbank AG analysts including Eugen Weinberg said in a note. The precious metal may see more downward pressure, should Fed Chair Janet Yellen’s speech Friday point to a rate hike soon, Commerzbank analysts wrote Wednesday.

Gold dropped 1.3 percent to $1,234 an ounce. The metal was at the highest level in more than three months on Feb. 24.

On Tuesday, New York Fed President William Dudley said the case for tightening had become a lot more compelling, while the San Francisco Fed’s John Williams said he expects a rate rise will receive “serious consideration” at the March 14-15 meeting.

© Copyright 2019 Bloomberg News. All rights reserved.

   
1Like our page
2Share
Markets
Gold investors are waking up to the reality of an increasing probability that borrowing costs in the U.S. could rise this month.
gold, investors, rate hike, bulls
270
2017-54-02
Thursday, 02 March 2017 12:54 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved