Gold Heads for Worst Month in 2017 on `Specter' of Higher Rates
Gold heads towards 2017’s biggest monthly loss as Trump’s tax plan kept dollar buoyant.
(Bloomberg) -- Gold touched the lowest since August and headed for the biggest monthly loss this year as traders raise bets that the Federal Reserve will boost U.S. rates by the end of December.
Bullion was up 0.3 percent to $1,286.97 an ounce at 2:03 p.m. in New York after slipping as much as 0.4 percent to the lowest since Aug. 25. Prices are down 2.6 percent this month. An index of gold producers is on track for the biggest loss since November.
Gold prices have fallen for the past three weeks as the Fed prepares to tighten monetary policy amid optimism over the health of the U.S. economy. That’s pared gains for the non-interest-bearing metal to about 12 percent this year. A rebound in the dollar this month and record-high stock markets have also sapped the appeal of bullion.
Gold futures for December delivery rose 0.1 percent to settle at $1,288.70 an ounce at 1:41 pm on the Comex in New York.
Prices have been “unable to stand the specter of higher U.S. interest rates and a stronger dollar,” Ed Meir, an analyst at INTL FCStone Inc. in New York, said by email. “The political focus in Washington has now shifted from the ill-fated health-care legislation to more growth-friendly issues like tax cuts and reforms.”
Odds of a Fed rate hike by December are at about 67 percent, up from less than 30 percent a month ago.
The greenback has risen in September after dropping almost every month this year, curbing demand for gold as an alternative asset. A gauge of the dollar was down 0.3 percent on Thursday.
“We expect the dollar to continue to recover, which will probably weigh on gold, silver and platinum prices,” ABN Amro Bank NV analyst Georgette Boele said in a note to clients.
Spot silver rose 0.5 percent to $16.8528 an ounce. Palladium and platinum advanced.
Gold closed below its 50-day moving average for the first time since July on Wednesday. That could be considered a bearish sign by traders who study charts. When gold fell below that level in June, prices dropped almost 4 percent in three weeks.
--With assistance from Ranjeetha Pakiam
To contact the reporters on this story: Eddie van der Walt in London at evanderwalt@bloomberg.net, Susanne Barton in New York at swalker33@bloomberg.net.
To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Joe Richter