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Goldman Sachs Says Fed Raising Rates in December to Hit Gold

  • Gold price forecast to drop to $1,000 an ounce over 12 months
  • Bank sees about 60% chance of rate liftoff in December
Updated on

The Federal Reserve will probably raise interest rates in December and follow that with a further 100 basis points of increases over 2016, according to Goldman Sachs Group Inc., which said the shift in U.S. monetary policy will hurt gold.

“The Fed’s rationale for wanting to start the normalization process is straightforward,” analysts including Jeffrey Currie said in a report. “In their view, labor-market slack has diminished substantially, the link between slack and inflation is stronger than widely believed, and the funds rate is far below the longer-term equilibrium rate, so they need to get started well before the economy is back to normal.”