Gold prices were unmoved after dollar surges on expectations that Fed will lift rates

gold pushes

The price of gold was nearly unmoved on early Thursday as the better-than-expected economic figures in the United States heightened expectations of a future interest rate hike by Fed.

U.S. consumer prices rose for the month of October and this has strengthened the prospects of investors that the U.S. Federal Reserve will incite a rate hike before this year ends.

Eric Rosengren, policymaker in Fed, said on Wednesday that a perfectly sustained economic growth and low unemployment rate could mean that the country has accelerated beyond its viable level, which can also be a go signal for the central bank to lift rates.

Gold futures tend to be pressured on interest rate hikes because of its habit of pushing bond yields higher and strengthening the dollar. This movement will increase the opportunity costs of the non-yielding bullion and make it expensive for holder’s outside the U.S., which will further lessen the demand.

Looking at gold prices, U.S. gold futures was slightly above the flat line by 0.1 percent to finish at $1,277.80 an ounce for its December delivery. Spot gold was almost unmoved at $1,278.55 an ounce after notching a session high of $1,278.55 an ounce in the previous session.

Helen Lau, an analyst from Argonaut Securities, said that the bound movement of gold’s range is a combination of equity market volatility and forecast of Fed rate hike, adding that there a currently increasing risks in the market.


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