Gold down to its lowest for three weeks as investors look for Dec Fed hike
Gold prices are at their lowest in three weeks after the Federal Open Market Committee announced that they won't push through with the interest rates hike.
Market Watch writes that gold for December settled at $1,147.30 an ounce on Comex. This is the lowest level it has been since October 8. Prices were at a one-week high Wednesday, but it went down after the results of the Fed's two-day meeting. The Fed reported that interest rates will remain close to zero levels. The Feds will have another meeting before the year ends in mid-December to discuss whether to push through with an interest rate hike.
According to Hantec Markets analyst Richard Perry, "An absolutely enormous intraday turnaround has scuppered what looked to be a burgeoning rally once more."
Profit Confidential reported that gold prices have definitely taken hits this year, as possibilities of Fed interest rate hike grew stronger. A higher interest rate means that investors are more attracted to income-generating assets like bonds and equities that pay dividends. This means they will slowly avoid investing in appreciative assets like gold. This is a development that would lead to a stronger growth for the US dollars.
Meanwhile, Fox Business reported that Spot gold went down 0.5 percent at $1,150.45. It dropped 0.3 percent at $1,152.50 by 1426 GMT, after going down 1 percent in the previous session. US gold futures dropped 2 percent at $1,153.70 an ounce.
According to Capital Economics analyst Simona Gambarini, "The consensus was for the first rate hike to occur in early 2016, so certainly yesterday's statement was read as hawkish compared to expectations."
As investors anticipate the rate hikes, the US central bank said that increasing interest rates during their next meeting would depend on the development on inflation and employment. It did not include global developments as one of the factors to consider for a rate hike.