Gold Falling Ahead of FOMC Head for Monthly Lows

Gold prices fell Wednesday, setting the yellow metal up for its lowest finish in about a month as investors await clues from U.S. Federal Reserve officials on the pace of interest-rate increases and the economic outlook.

The central bank will conclude their two-day monetary policy meeting and issue a statement shortly after the settlement for gold futures prices later Wednesday.



June gold GCM7, -0.68% fell $7.30, or 0.6%, to $1,249.70 an ounce. A settlement around this level would be the lowest since April 5, according to FactSet data.

The Fed decision also comes two days ahead of U.S. employment data for April, scheduled to be released on Friday, and another likely market mover across the risk spectrum.

Rising real interest rates tend to lower the opportunity costs of holding gold because the metal provides no yield. Higher rates may also boost the value of the dollar, which usually moves in the opposite direction of the gold price.

via MarketWatch

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza