Gold drops below $1,300 as stocks stabilize

03-Nov (MarketWatch) — Gold futures on Thursday pulled back from their highest finish in a month as the dollar and stocks, hit this week by U.S. election uncertainty, nursed their losses.

Gold futures pushed below the key $1,300-an-ounce level intraday. The metal had held this closely watched line despite volatile after-hours trading on Wednesday when the U.S. Federal Reserve left interest rates unchanged but said the case for an increase in rates “has continued to strengthen.”

By market reckoning, that leaves open the door for a rate hike in December. Gold tends to lose demand to interest-bearing investments in a rising-rate climate, although other factors, including political jitters, continue to underpin precious metals.

“The market will probably only be willing to fully price in the rate hike if [Democratic nominee Hillary] Clinton wins the election,” said commodities analysts at Commerzbank, led by Carsten Fritsch, in a note. “In this case, gold could come under pressure again. At present, the Fed fund futures put the probability of a December rate hike at somewhat more than 60%.”

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