Gold Falls on Fed Rate Hike Agenda Expectation

Gold futures fell as analysts brought forward estimates for the Federal Reserve to raise U.S. interest rates, crimping demand for the metal as an inflation hedge.

Goldman Sachs Group Inc. revised its forecast for higher borrowing costs to the third quarter of 2015, rather than the first three months of 2016, citing an accelerating economy. The bank joins JPMorgan Chase & Co. and Bank of Tokyo-Mitsubishi UFJ Ltd. in moving up its estimates. The Fed has kept its benchmark lending rate near zero percent since December 2008.

Gold climbed for five straight weeks as central bank policy makers said after their June gathering that rates will stay low for a “considerable time.” Minutes from the meeting will be published on July 9. Gold slumped 28 percent last year on concern that the Fed would taper monetary stimulus as the economy improved.

via Bloomberg

This article 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 Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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