Gold Drops Ahead of Fed’s FOMC

Gold futures headed for the longest slump in five weeks on concern that the Federal Reserve is moving closer to raising U.S. interest rates, crimping demand for the precious metal as an alternative investment.

In the third quarter, gold slumped 8.4 percent as the U.S. economy gained. The Fed meets Dec. 16-17 to debate the pace of raising borrowing costs after holding its benchmark rate close to zero percent since 2008.

Last month, gold dropped to a four-year low as equities surged to a record and oil prices entered a bear market. Jeffrey Currie, head of commodity research at Goldman Sachs Group Inc, said last week that the metal will drop as the U.S. economy improves. Economists and Fed officials surveyed by Bloomberg expect higher rates in 2015.

“This week will be all about the Fed,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “Some investors are waiting on the sidelines until they get a clearer picture from the Fed.”

Gold futures for February delivery fell 0.9 percent to $1,211.40 an ounce at 9:48 a.m. on the Comex in New York. The price headed for the fourth straight decline, the longest slump since Nov. 6.

via Bloomberg

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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