Gold Futures Touch Lowest in a Month as Fed Rate Bets Climb

  • Gold price falls to $1,317.20, the lowest since July 20
  • Fed funds futures indicate 36% chance of September rate hike

Gold futures touched the lowest in more than a month after comments from central bankers last week boosted speculation that U.S. interest rates may rise as soon as next month.

Fed funds futures indicated a 36 percent chance that the Fed will hike rates in September, up from 24 percent a week ago. Higher rates make bullion less competitive against interest-bearing assets. Gold pared losses late in the trading session as the U.S. dollar relinquished most of its gains on Monday afternoon.

Bullion’s 2016 rally has stalled this month as rate concerns mount. Fed Chair Janet Yellen said on Friday that the case for tightening had strengthened, while Fed Vice Chairman Stanley Fischer said an increase at the Sept. 20-21 meeting was possible. On Saturday, Bank of Japan Governor Haruhiko Kuroda reiterated a pledge to ease policy further if necessary, potentially hurting the yen.

“We could have had a gold rally if it wasn’t for Yellen’s speech, where she said there was a good case for a raise in interest rates,” George Gero, a managing director at RBC Wealth Management in New York, said in a telephone interview. “It seems like everybody is on hold waiting to see what’s going to happen in September.”

Gold futures for December delivery added 0.1 percent to settle at $1,327.10 an ounce at 1:49 p.m. on the Comex in New York. Earlier, the metal touched $1,317.20, the lowest since July 20. Aggregate trading was 36 percent below the 100-day average for this time.

In other precious metals:

  • Holdings in bullion-backed exchange traded funds lost 1.4 metric tons to 2,032.25 tons on Friday, data compiled by Bloomberg show.
  • Silver futures for December delivery gained 0.6 percent to $18.859 an ounce on the Comex.
  • On the New York Mercantile Exchange, platinum and palladium rose.
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