Spot gold on Tuesday, December 13, dropped to 0.3% to an ounce at 4.26pm, after briefly touching a 10-month low on Monday. US gold futures were down 0.5% at $1,160.70
Gold prices are highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion.
The preciosu metal dipped slightly on Tuesday, losing its lustre ahead of a key two-day meeting of the US Federal Reserve that is expected to deliver the second interest rate rise in a decade.
The Fed meeting starts later on Tuesday and markets have priced in a nearly 100% chance of a quarter percentage point increase.
Higher rates could dent demand for the non-interest paying asset, while also boosting the dollar. Spot gold slipped 0.3% to $1,157.96 an ounce at 4.26pm, after briefly touching a 10-month low on Monday.
US gold futures were down 0.5% at $1,160.70. “The market is looking for future guidance because at this stage a rate hike should be a given,” said Saxo Bank’s head of commodity strategy, Ole Hansen.
Investors will be looking for clues on how the central bank will deal with inflation that could possibly emanate from the policies of US President-elect Donald Trump and growth expectations. “The Fed is as confused with Trump as is the rest of the world so it will be interesting what kind of guidance they give going into 2017,” Hansen said.
Spot prices recovered from the 10-month low of $1,151.34 an ounce, touched in the previous session, as US Treasury yields came off their highs and the dollar eased ahead of the Fed meeting.
Reflecting lacklustre sentiment, holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.14% to 856.26 tonnes on Monday from Friday, Reuters reports.
Silver was up 0.4% at $17 an ounce, after rising nearly 1.4% in the previous session. Platinum shed 0.7% to $924.60. The white metal rose as much as 1.9% in the previous session. Palladium was flat at $722.60. Reuters
