Gold prices, on Wednesday, December 14, bounced from its lowest close in 10 months before the U.S. Federal Reserve’s meeting to set interest rates amid unanimous expectations for the first increase in 2016, Bloomberg reports.
Gold rose 0.3 percent to $1,161.94 an ounce by 10:52 a.m. in London, according to Bloomberg generic pricing.
It closed at $1,158.54 on Tuesday, the lowest since Feb. 4. Holdings of the metal in exchange-traded funds fell for a 23rd day, the longest losing run since May 2013.
The metal has tumbled in the past month, partly on anticipation of the decision as well as a surge in U.S. equities to records since the election of Donald Trump as president, who has pledged to spur investment. Fed funds futures show investors are pricing further increases in borrowing costs next year.
“The reality is the Fed’s expected hike should be pretty much priced in,” said Robin Bhar, an analyst at Societe Generale SA, said by phone.
While investors will be watching for Fed Chair Janet Yellen’s comments on future monetary policy, they shouldn’t expect much given the uncertainty over Trump’s policies, Bhar said. “Yellen’s hands are tied and will be until there’s more policy certainty from the incoming president,” he said.
Gold has been battered this quarter, with only sugar showing worse returns among the raw materials on the Bloomberg Commodity Index. A surge in the S&P 500 Index and Dow Jones Industrial Average stock benchmarks are at all-time highs, reducing demand for the precious metal.
A measure of the dollar against its overseas peers is near the highest since at least 2004, making gold dearer for those holding other currencies. ETF holdings fell 1.1 metric tons to 1,830.6 tons on Tuesday, the lowest since June, data compiled by Bloomberg show.
