Gold Volatility Sags to 2-Year Low as Traders Assess Fed Outlook

  • Gold’s 60-day volatility drops to lowest since October 2014
  • Silver, platinum and palladium prices decline in N.Y.

Gold Outperforms With U.S. Rates on Hold

Gold is back in the doldrums as investors pause to assess the outlook for monetary policy after the Federal Reserve held U.S. interest rates steady last week.

Bullion’s 60-day volatility fell on Monday to the lowest since October 2014, while aggregate trading in futures was 38 percent below normal for this time. Traders will look for clues as European Central Bank President Mario Draghi addresses a closed-door session of German lawmakers on Wednesday, while Fed Chair Janet Yellen testifies this week before the U.S. House Financial Services Committee.

Gold futures posted the biggest weekly advance since June last week after U.S. central bankers left rates unchanged at their September meeting. Investor attention is turning to the Fed’s December gathering, where traders see odds of a rate increase at more than 50 percent.

“Now that the decision is behind, it seems gold is probably not going to be as volatile until the December meeting,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview.

Gold futures for December delivery rose 0.2 percent to settle at $1,344.10 an ounce at 1:44 p.m. on the Comex in New York. The metal climbed 2.4 percent last week.

A report from the U.S. Commodity Futures Trading Commission on Friday showed hedge funds reduced their net-long position by 29,724 futures and options contracts to 219,134 in the week ended Sept. 20, the lowest since June.

Gold has risen more than 25 percent in 2016 amid signs of a slowing global economy and concerns over the U.K.’s vote to exit from the European Union. The metal may be in for a bumpy ride in the final quarter, as Republican candidate Donald Trump’s odds of winning the U.S. presidential election increase and investors prepare for the possibility of higher U.S. rates, according to Citigroup Inc. A Bloomberg Politics poll has Trump and Democrat Hillary Clinton deadlocked before a debate later Monday.

In other markets news:

  • Gold assets in exchange-traded funds were little changed at 2,030.6 metric tons on Friday, data compiled by Bloomberg show.
  • Silver futures for December delivery slid 1.1 percent to $19.596 an ounce on the Comex.
  • On the New York Mercantile Exchange, platinum and palladium futures also fell.
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