Gold prices dropped steeply on Thursday, after the U.S.
Federal Open Market Committee signaled hiking interest
rates is possible at its December meeting.
Comex gold for December delivery dropped 1.40% to $1,159.60 an ounce.
Comex silver for December delivery dipped 2.11% to trade at $15.950 an ounce.
Gold hit a one-week high on Wednesday, but then slid in electronic trading after the Fed statement was issued at the close of the central bank’s two-day meeting yesterday.
“An absolutely enormous intraday turnaround has scuppered what looked to be a burgeoning rally once more. This is the second time in 4 sessions this has happened (the first being on Friday in the wake of the PBOC rate cut),” Richard Perry, analyst at Hantec Markets, in a note.
Although the marketplace had been quite confident the Fed would not hike before the year-end, a more hawkish-than-expected statement took the market by surprise.
The CME Group’s FedWatch tool now shows market participants are pricing in a 42.6% chance of a rate lift-off at the December meeting, scheduled for December 15-16.
Gold has been at advantage due to the Fed’s ultra-soft monetary policy
because commodities like gold do not offer interest.
The dollar, meanwhile, reached the highest level against the euro in nearly three months on Wednesday, but has since lost some of those gains, with EUR/USD last seen at 1.0968, up 0.41%.
Elsewhere in the metals trading, December copper lost 1.05% to trade at $2.338 a pound.
Palladium for December delivery dropped 1.82%, to $673.60 an
ounce.
January platinum fell 1.64%, to $996.10 an ounce.
