Gold Prices Turn Lower Amid Strong Economic Data
24 October 2016 - 8:37PM
Dow Jones News
By Ira Iosebashvili
Gold prices reversed course and moved lower Monday as strong
U.S. economic data bolstered the case for the Federal Reserve to
raise interest rates in coming months.
Gold for December delivery closed down 0.3% at $1,263.90 a troy
ounce on the Comex division of the New York Mercantile Exchange.
Prices were as high as $1,272.80 a troy ounce earlier in the
session.
U.S. manufacturers started the last quarter of the year on a
positive note, as output and new order growth hit one-year peaks,
data from Markit showed Monday. The solid numbers helped to
strengthen the view that the Fed has a clear path to raise interest
rates before the end of the year.
Federal-funds futures, used to bet on central bank policy, on
Monday showed that investors assigned a 74.2% likelihood of a rate
increase in December, up from around 50% in the middle of last
month.
Expectations of higher rates are often detrimental to the price
of gold, which struggles to compete with yield-bearing investments
when borrowing costs rise.
Some analysts believe the pressures of an impending rate rise
may be balanced out by other factors, including increasing physical
demand for the metal from China. For the first eight months of
2016, Hong Kong's net gold exports to mainland China totaled
555,300 kilograms, an increase of 15% compared with the same period
last year, according to HSBC.
Prices for the safe-haven metal may also be supported by
geopolitical uncertainty surrounding elections in the U.S. and
France, analysts at HSBC said in a note to clients.
"Gold prices seem likely to trade sideways for now," the report
said.
Silver for December delivery rose 0.6% to $17.60 a troy ounce,
January platinum rose 0.7 % to $939.10 a troy ounce, and December
palladium rose 1.6% to $630.75 a troy ounce.
Write to Ira Iosebashvili at ira.iosebashvili@wsj.com
(END) Dow Jones Newswires
October 24, 2016 15:22 ET (19:22 GMT)
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