Gold near three-week lows on Fed rate expectations

23-May (Reuters) — Gold dipped on Monday to a near three-week low on expectations the U.S. Federal Reserve will hike interest rates as early as June. Bullion has been under pressure since the Fed last week released the minutes of its April meeting, which showed officials believe the U.S. economy could be ready for another interest rate increase next month.

Higher interest rates increase the opportunity cost of holding non-yielding bullion.

Eric Rosengren, president of the Federal Reserve Bank of Boston, said on Friday that conditions for a rate increase are “on the verge of broadly being met”.

“The Fed minutes were clearly more hawkish than expected and this has resulted in some change in sentiment and there is now an increased likelihood that they may raise rates in June or
July,” ABN Amro analyst Georgette Boele said.

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PG View: Remember what happened when the Fed hiked last December? Gold launched on a 20%+ rally . . .