Gold futures settle at a one-month low
San Francisco (Aug 24) Gold futures fell Wednesday to log their lowest finish in about a month, as investors hope for clarity this week on the near-term path for interest rates.
Precious metals and the dollar have vacillated amid shifting expectations about the U.S. Federal Reserve’s interest-rate policy, ahead of a closely watched retreat in Jackson Hole, Wyo., where Fed Chairwoman Janet Yellen will speak on Friday. Economists have said the U.S. central bank remains very data-dependent as it looks ahead to the final policy meetings of 2016, but that’s done little to dissuade market speculation.
December gold GCZ6, -1.38% dropped $16.40, or 1.2%, to settle at $1,329.70 an ounce. That was the lowest settlement for the contract since July 26, according to FactSet data.
“We suspect that any hawkish tone emanating from [Yellen’s] speech regarding rates would have a negative impact on gold,” said Edward Meir, an independent commodity consultant at INTL FCStone. “But this Fed has proved time and again that it is not one to surprise the markets and if anything, is far more timid than bold.”
The dollar largely gained versus major rivals, leaving the ICE dollar index DXY, +0.29% up 0.3%. U.S. stocks, meanwhile, traded mostly lower in the wait for the Fed’s next clues.
Read: Inverse relationship between gold, stocks has never been this extreme
A firmer dollar tends to make the gold priced in this currency less attractive to investors. Higher interest rates can also turn investors away from nonyielding gold in favor of alternatives that typically fare better in a rising-rate climate.
Despite the back-and-forth, there’s a near-term bias in favor of the dollar and against gold, said Ilya Spivak, currency strategist, with FXCM’s DailyFX.
“A shift in priced-in policy bets implied in Fed funds futures hints investors are leaning toward a hawkish outcome, hinting the greenback may find fuel for greater gains as the end of the week draws closer,” he said.