Gold Extends Recent Slide With Fed in Focus
13 December 2017 - 6:51AM
Dow Jones News
By Amrith Ramkumar and David Hodari
Gold prices fell for a fourth straight session with the Federal
Reserve beginning its final meeting of the year.
Gold for February delivery declined 0.4% to $1,241.70 a troy
ounce on the Comex division of the New York Mercantile Exchange.
Prices have fallen to their lowest level since July recently,
weighed down by a rebounding dollar and investor concerns over
higher interest rates. A dollar-denominated commodity, gold becomes
more expensive for overseas buyer when the U.S. currency grows
stronger. It also struggles to compete with yield-bearing assets
like Treasurys as borrowing costs rise.
The Fed is widely expected to announce a third rate increase of
2017 following the conclusion of its two-day meeting Wednesday.
Investors and analysts have said they will be paying close
attention to the central bank's outlook for 2018, as some have said
projections for fewer rate increases next year or statements
indicating a cautious approach could buoy gold prices.
"The Fed tomorrow ends up being really important to this forward
gold market," said Rob Haworth, senior investment strategist at
U.S. Bank Wealth Management.
Prices are roughly 7.5% off their year-to-date highs from early
September, though they are still up about 8% for the year. Some
analysts have said they expect them to rise after the Fed
meeting.
The dollar's recent rise amid the possibility of tax cuts has
hurt gold and other commodities. The WSJ Dollar Index, which tracks
the U.S. currency against a basket of 16 others, was up 0.1%
Tuesday, paring earlier losses after data was released showing a
gauge of U.S. business prices rose in November, pointing to
emerging inflation pressure in the economy.
The producer-price index for final demand, which measures
changes in the prices U.S. companies receive for their goods and
services, increased a seasonally adjusted 0.4% in November from a
month earlier
"This morning's PPI number is not comforting if you're a gold
bull," Mr. Haworth said. "It points to a hawkish Fed in the
future."
Among base metals, copper for March delivery swung between small
gains and losses and closed up 0.4% at $3.0230 a pound. The
industrial metal surged back above $3 Monday, with Commerzbank
analysts saying in a note that bullish lending data out of China,
the world's largest base metals consumer, supported prices.
Monday's gains came after copper had its worst day in almost three
years last week, with some investors concerned the Chinese economy
will slow down moving forward.
For the year, they are up nearly 20% and roughly 6.5% off their
three-year highs from October.
(END) Dow Jones Newswires
December 12, 2017 14:36 ET (19:36 GMT)
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