Metals: Gold Inches Lower Ahead of Fed Meeting
December 11 2017 - 3:17PM
Dow Jones News
By Amrith Ramkumar and David Hodari
Gold prices swung between small gains and losses Monday after
closing at their lowest level since July last week.
Gold for February delivery closed down 0.1% at $1,246.90 a troy
ounce on the Comex division of the New York Mercantile Exchange in
a third straight session of losses The dollar rebounding from
multiyear lows and concerns about higher interest rates have pushed
prices roughly 7.5% off their year-to-date high from early
September.
A dollar-denominated commodity, gold becomes more expensive for
overseas buyers when the U.S. currency grows stronger. The dollar
fell slightly Monday ahead of the Federal Reserve's two-day meeting
that begins Tuesday. The WSJ Dollar Index, which tracks the dollar
against a basket of 16 other currencies, declined 0.1%.
Many investors and analysts have said they expect gold to fall
ahead of the Fed's last meeting of 2017, with the central bank
widely expected to raise interest rates for a third time this
year.
"Right now, the path of least resistance for gold prices is
sideways to lower," said Jim Wyckoff, senior analyst at Kitco
Metals.
However, some have said doubts about the Fed's plans to raise
rates three times again next year as inflation remains sluggish
could boost prices after the meeting. Friday's jobs report once
again showed tepid wage growth, another sign that inflationary
pressures remain muted.
"Gold and precious metals tend to be bought on the fact of a
rate hike, having been sold [off] previously," Jonathan Butler, a
precious metals strategist at Mitsubishi, said in a note to
clients.
Traders are also monitoring signs of geopolitical turbulence
that tend to boost haven assets such as gold when investors believe
markets might turn rocky. Some have said the continuing rise of
major stock indexes around the world and recent popularity of
cryptocurrencies have made gold a less attractive investment
vehicle.
Among base metals, copper for March surged 1.1% to $3.0115 a
pound, rising rapidly in midmorning trading. Monday's gains came
after the industrial metal fell sharply last week back below $3 and
about 7% off its three-year highs from October on concerns that
demand from China, the world's largest consumer, will slow moving
forward.
Still, prices are up nearly 20% for the year, with the Chinese
economy having outperformed expectations in 2017. Data released
Friday showed Chinese copper imports hit their highest level of the
year in November. The dollar's weakness and oil prices rising were
also supporting copper prices, as many investors trade the
commodities in a single basket.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and David
Hodari at David.Hodari@dowjones.com
(END) Dow Jones Newswires
December 11, 2017 15:02 ET (20:02 GMT)
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