Speculations that the Federal Reserve is moving closer to raising US interest rates amid growing economy have sent the yellow metal down to almost 1-week lows. Silver, platinum and palladium also declined.
On December 16-17 the Fed meets to debate the pace of raising borrowing costs after holding interest rates near zero since 2008 to boost growth. As Bloomberg informs, economists and Fed officials expect higher U.S. rates in 2015. Rising rates cut gold’s allure because bullion generally offers investors returns only through price gains.
The Fed “may change the wording of its communique and signal an interest rate hike in the near future,” Commerzbank AG analysts including Daniel Briesemann said in a report today.
“The gold price is likely to come under pressure ahead of the rate hikes and pull silver down with it.”
Gold for immediate delivery fell 1.10% to $1,210.75 an ounce at 12:55 in Johannesburg. It reached $1,210.49 earlier - the lowest since Dec. 9. Gold for February delivery lost 0.9% to $1,211.20 on the Comex.
Money managers’ net-long position in U.S. futures and options rose for a fourth week in the period to Dec. 9, the longest stretch of increases since July, government data show. The yellow metal rose 2.5% in London last week, the most in two months, as the dollar declined and global stocks tumbled amid a slump in energy prices. Silver for immediate delivery declined 0.96% to $16.8660 an ounce in Johannesburg, after rising in the past two weeks. Platinum slipped 1.01%t to $1,217.60 an ounce. Palladium dipped 0.25% to $810.50 an ounce.
The Bloomberg Dollar Spot Index added 0.1% on Monday. The gauge rallied to a five-year high this month. Holdings in gold-backed exchange-traded products fell 1.5 metric tons to 1,611.3 tons as of Dec. 12, data compiled by Bloomberg show. They reached the lowest since 2009 on Dec. 8.
