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David Fickling

Gold Bugs Are Watching the Wrong Central Bank

A tolerance for higher inflation in the subcontinent spells bad news for demand.

What the hell just happened to gold? The metal, which rarely moves more than 1 percent in a day, just slumped 3.3 percent to its lowest level since June's Brexit vote.

Analysts pointed to comments in a speech Tuesday by Richmond Federal Reserve President Jeffrey Lacker arguing for higher interest rates. But while gold's slump matches the timing of his speech, the remarks were hardly a shock. Lacker is one of the most hawkish presidents of the Fed's regional banks, pushing for tighter monetary policy even as the U.S. was tipping toward recession in 2006. He won't even be a full voting member of the Fed's interest rate-setting committee until 2018.