Gold Falls 1% as USD Recovers on Fed Rate Hike Boost

GOLD has fallen one per cent, pressured as the US dollar strengthened on renewed expectations that the Federal Reserve will raise US interest rates for the first time in nearly a decade.

WEAKNESS in other commodities also weighed on gold, which rallied last week after the Fed left rates at ultra-low levels, keeping a lid on the opportunity cost of holding non-yielding bullion.

Gold failed to maintain those gains after a Fed official emphasised that a rise had only been postponed.

Spot gold was down 0.7 per cent at $US1,125.22 an ounce at 3:17pm EDT (0517 Wednesday AEST), while US gold futures for December delivery settled down 0.7 per cent at $1,124.80 an ounce.

Platinum slid the most among precious metals, down more than 3.00 per cent to a six-and-a-half-year low. Some traders cited news that the falsification of Volkswagen AG US vehicle emission tests could affect 11 million of its cars worldwide. Platinum is used in diesel catalysts.

Platinum was down 3.4 per cent at $US932.75 an ounce, after falling to its lowest since January 2009 at $US929.50.

Via Herald Sun

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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