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Gold Drops Below $1,300 to Lowest Since June on Fed Rate Concern

  • Fed’s Mester says U.S. economy is ripe for a rate increase
  • UBS sees Fed tightening monetary policy at December meeting
Updated on

Gold plunged the most in almost three years, falling below $1,300 an ounce for the first time since June amid mounting concern that an improving U.S. economy will push the Federal Reserve to boost interest rates soon. Shares of gold-mining companies also declined.

Fed Bank of Richmond President Jeffrey Lacker urged the central bank to raise rates to head off a likely pickup in inflation that would force bigger increases later. On Monday, Fed Bank of Cleveland President Loretta Mester said she expects the case for a hike to remain “compelling” at the next review in November. The dollar headed for the biggest gain in two weeks against a basket of currencies, curbing the appeal of gold of as an alternative asset.