Gold Falls to 8 Month Low on Fed and No Vote

Gold fell near an eight-month low in New York after the Federal Reserve raised its interest-rate forecasts this week, strengthening the dollar.

Gold lost 0.7 percent this week as the U.S. central bank raised its estimate for the federal funds rate even as policy makers kept a pledge to hold borrowing costs near zero for a considerable time after ending debt buying. The dollar neared a 14-month high set versus the euro yesterday.

Higher rates reduce gold’s allure because the metal only offers investors returns through price gains, while a stronger dollar typically cuts demand for a store of value. Bullion’s decline has kept its 14-day relative strength index held below 30 for nine straight days, signaling prices may be poised to rebound. Trading volumes in China, the biggest buyer, have picked up this week.

“The overall direction will be dictated by the dollar,” David Govett, head of precious metals at Marex Spectron Group in London, said in a note today. “Physical buying that has been lacking for such a long time, seems to be coming out of the woodwork and that provided support.” 

Gold for December delivery lost 0.3 percent to $1,233.10 an ounce by 7:27 a.m. on the Comex in New York. Prices are down a third week and reached $1,216.30 yesterday, the lowest since Jan. 6. Gold for immediate delivery slipped 0.2 percent to $1,222.59 in London, according to Bloomberg generic pricing.

Futures trading volume was 54 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg show.

via Bloomberg

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.