Global Gold is Down Day by Day – Gold near one-month low as Yellen signals December rate hike
Gold held near a one-month low on Thursday and looked likely to drop below the $1,100-an-ounce level after Federal Reserve Chair Janet Yellen bolstered market expectations for a U.S. interest rate hike in December.
Yellen pointed to a possible December interest rate lift-off and laid out what now appears the base case at the U.S. central bank – that low unemployment, continued growth and faith in a coming return of inflation means the country is ready for higher interest rates.
Other Fed officials also voiced similar opinions, sending non-interest-paying bullion lower for a sixth straight session on Wednesday.
Spot gold had ticked up 0.3 percent to $1,110.10 an ounce by 0319 GMT, staying close to the previous session’s low of $1,106, the weakest since Oct. 2.
Gold is about $30 shy of a 5-1/2-year low of $1,077 hit in July. It has lost nearly $60 over the past six sessions.
“We think that a December rate hike is more likely than not and an appropriate market reaction is a lightening up of risk, weaker commodities, higher yields and a firmer dollar,” ANZ said in a note.
Yellen’s remarks caused investors to reset their expectations of a December rate hike above 60 percent.
Another top Fed official said on Wednesday that a policy meeting set for Dec. 15-16 is a “live possibility” for raising U.S. interest rates for the first time in nearly a decade.
The dollar rose to a three-month high, along with a jump in U.S. Treasury yields, hurting gold, which tends to benefit from a low interest rate environment.
“Bullion weakened after perceivably hawkish monetary policy comments by … Yellen,” said HSBC analyst James Steel. “The next focus for the gold market may shift to the upcoming release of nonfarm payrolls data on Nov. 6.”
A robust U.S. jobs report on Friday could trigger another sell-off in gold, already facing weak technicals and investor outflows.
Assets in SPDR Gold Trust, the top gold-backed exchange-traded fund, fell to 680.11 tonnes on Wednesday – the lowest in six weeks.
“Price action is very bearish, but we expect to find initial support at the October low of $1,105 and the September low of $1,100,” ScotiaMocatta analysts said.