Fading on gold. Stock image.
Gold fell the most in a week as the dollar hit a multi-month high and traders considered the outlook for the Federal Reserve’s interest-rate policy.
A gauge of the dollar is on course for its longest winning streak since July, weighing on commodities including gold that are priced in the greenback. Still, bullion has staged a power advance since late August as investors bet on further easy money by the Fed. Despite its recent steep declines, the precious metal is still up more than 50% this year. Any changes in the Fed’s rate path may derail bullion’s price rally as higher rates are typically negative for the non-yielding metal.
At the conclusion of the Fed meeting late last month, Chair Jerome Powell cautioned investors against assuming the US central bank would follow up with another cut in December — remarks that pushed gold prices lower on that day. Since then, a trio of policymakers stopped short of endorsing another interest-rate reduction next month.
A “hesitant Fed and the strong dollar” are the culprits for the selloff in gold today, said Ole Hansen, head of commodity strategy at Saxo Bank.
At present, traders see a roughly two-thirds chance of the Fed easing next month, a more hawkish view than two weeks ago, according to Bloomberg calculations derived from futures prices.
Bullion was 1.7% lower at $3,934.77 an ounce at 4:04 p.m. in New York. The Bloomberg Dollar Spot Index edged higher. Silver, platinum and palladium all fell.
(By Yvonne Yue Li)