Gold Slips as Investors Weigh Fed Meet, ‘Changing’ U.S. Election

  • Fed Reserve set to gather this week to review interest rates
  • U.S. political situation affecting markets: RJO’s Streible

Can Jobs Data Prevent a December Fed Hike?

Gold fell for the first time in three sessions as investors weighed the possibility of an impending Federal Reserve interest rate increase and new uncertainties related to the U.S. presidential campaign.

The Federal Open Market Committee is scheduled to announce on Wednesday its latest outlook on the economy, highlighting the possibility the central bank will raise the benchmark interest rate by year’s end. U.S. polls showed that Hillary Clinton lost some ground to Donald Trump after the Federal Bureau of Investigation said it’s reviewing newly discovered e-mails that may be pertinent to its inquiry of her use of a private server.

“You’ve got the FOMC meeting Tuesday and Wednesday and I could see some guys positioning in gold early, and the Fed may give a strong indication that they’re going to raise rates in December,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “The political situation is also having one of the biggest impacts on all these markets, because it seems like every five minutes the story is changing.”

Gold futures for December delivery slid 0.3 percent to settle at $1,273.10 an ounce at 1:49 p.m. on the Comex in New York, the first decline in three trading days.

While Federal Reserve policy makers are gathering this week, investors do not expect them to alter course before the Nov. 8 U.S. election. The odds of a hike announcement this week are 16 percent, and rise to 71 percent in December, according to Fed Fund Futures. Higher rates reduce the appeal of gold, which doesn’t pay interest or offer returns like bonds and equities.

In other precious metals:

  • Silver futures for December delivery closed unchanged at $17.796 an ounce on the Comex.
  • On the New York Mercantile Exchange, platinum dropped, while palladium rose.
  • Holdings in exchange-traded funds backed by bullion gained 1.93 metric tons to 2,040.3 tons as of Friday.
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