MW: Gold weakens as expectations for rate rise grow
Gold futures lost some ground Monday as traders await this week’s meeting of Federal Reserve policy makers. While the Fed is widely expected to stand pat, a stronger case for a rate rise later in the year has been weighing on the precious metal.
Gold for August delivery on Comex GCQ6, -0.68% fell $7.40, or 0.%6, to $1,315.70 an ounce. September silver SIU6, -1.01% was down 17 cents, or 0.9%, at $19.51 an ounce.
Gold lost ground Friday, posting its second consecutive weekly loss as a stronger dollar and rising equities dulled its haven appeal.
“The price of gold has been moving steadily lower over the past couple of weeks, largely due to increased expectations of the U.S. central bank continuing on their path of rate hikes,” said David Cheetham, market analyst at XTB, in a note.
The Fed will conclude a two-day policy meeting Wednesday afternoon. While no policy moves are expected, its statement will be watched closely for clues to further moves.
The dollar DXY, +0.03% meanwhile, strengthen against major rivals on renewed expectations for tighter Fed policy. A stronger dollar can undercut commodities priced in the unit as it makes them more expensive to users of other currencies.
U.S. stock-index futures were mixed, but the S&P 500 SPX, -0.26% and the Dow Jones Industrial Average DJIA, -0.29% both notched record highs last week, further sapping gold of its haven appeal.
Cheetham said the strong June employment report released on July 8 followed by other relatively upbeat U.S. data have “supported the case for tighter monetary policy in the U.S. in the not-too-distant future.”
In other metals activity, October platinum PLV6, -1.17% fell $12.70, or 1.2%, to $1,075.70 an ounce, while September palladium PAU6, -0.35% lost $2.30, or 0.3%, to $683.75 an ounce. September copper HGU6, -0.09% slipped 0.1% to $2.23 a pound.
