Gold Traders Are ‘Jaded’ to Global Fears Ahead of Expected Fed Hike

Updated on
  • Bullion has fallen about 9% since one-year high in September
  • Traders have priced in a 100% chance of rate hike this week
Tracking the Dots Ahead of the Fed Meeting

In the face of a rapidly changing world, gold investors appear to be focusing more on the strength of the global economy and are becoming less sensitive to turmoil.

Bullion fell for a fourth session, the longest losing streak in six months, as investors wager the Federal Reserve will raise U.S. interest rates this week amid improving economic data and rising inflation. That’s overshadowed geopolitical concerns and the news of a terrorist attack in New York Monday, mitigating gold’s appeal as a haven.

“Participants on the gold market appear jaded at present,” Commerzbank AG analysts said in a report Tuesday. “Investors seem to have no need of security just now.”

A Bloomberg index of senior gold companies dropped to the lowest since July, while gold has fallen about 9 percent since hitting a one-year high in September. Investors fear higher rates will sap any appeal of non-interest-bearing assets such as gold, with traders pricing in a 100 percent probability of a hike.

“Gold futures may sell off to $1,215 - there’s not much to stop it,” said Phil Streible, senior market strategist at RJO Futures in Chicago. “Gold has been losing market share.”

Bullion futures for February delivery fell 0.4 percent to settle at $1,241.70 an ounce at 1:32 p.m. on the Comex in New York. Earlier they touched $1,238.30, the lowest for an active contract since July.

The Bloomberg Intelligence global senior gold valuation peers index dropped 1.4 percent in a second day of losses.

Other precious metals:

  • March silver futures fall on the Comex.
  • Platinum for January delivery drops on New York Mercantile Exchange, while March palladium futures rise.
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