Gold slides to 10-1/2-month low on dollar's post-Fed surge | Reuters

By Marcy Nicholson and Jan Harvey | NEW YORK/LONDON NEW YORK/LONDON Gold fell more than 1 percent to a 10-1/2-month low on Thursday after the Federal Reserve sounded an unexpectedly hawkish note on U.S. interest rates, sparking a surge in Treasury yields and sending the dollar to a 14-year high.Lifting the federal funds rate to a 0.50-0.75 percent range on Wednesday, the U.S. central bank flagged a faster pace of hikes next year as it geared up for the incoming Trump administration's pledges to cut taxes and boost spending.That sparked a rally in the dollar, pressuring assets priced in the currency, while U.S

Reuters December 16, 2016 02:49:08 IST
Gold slides to 10-1/2-month low on dollar's post-Fed surge
| Reuters

Gold slides to 1012month low on dollars postFed surge
 Reuters

By Marcy Nicholson and Jan Harvey
| NEW YORK/LONDON

NEW YORK/LONDON Gold fell more than 1 percent to a 10-1/2-month low on Thursday after the Federal Reserve sounded an unexpectedly hawkish note on U.S. interest rates, sparking a surge in Treasury yields and sending the dollar to a 14-year high.Lifting the federal funds rate to a 0.50-0.75 percent range on Wednesday, the U.S. central bank flagged a faster pace of hikes next year as it geared up for the incoming Trump administration's pledges to cut taxes and boost spending.That sparked a rally in the dollar, pressuring assets priced in the currency, while U.S. Treasury yields soared, lifting the opportunity cost of holding non-yielding gold."The Fed was more hawkish than expected, which re-started this dollar rally," ABN Amro analyst Georgette Boele said. "With yields rising in the United States and the dollar massively up, that's the worst possible combination for gold."

Spot gold XAU= hit a 10-1/2-month low of $1,122.35 an ounce, and was down 1.2 percent at $1,130.72 by 3:03 p.m. EST (2003 GMT). U.S. gold futures GCv1 for February delivery settled down 2.9 percent at $1,129.80, showing a stronger decline as it had settled positive on Wednesday prior to the Fed statement."The latest move in short-term U.S. Treasury yields suggests that the price of gold has further to fall," said Caroline Bain, chief commodities economist for Capital Economics, cautioning that "higher nominal yields need not necessarily be negative for gold if they reflect rising inflation expectations."Bullion had already fallen sharply in the run-up to the Fed meeting after Republican candidate Donald Trump's election to the U.S. presidency sparked a rally in the dollar and a rise in assets seen as higher risk, like stocks, at gold's expense.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares (GLD), are down about 10 percent from mid-November. "While our house view remains for two rate hikes in 2017, we acknowledge risks of a faster pace," said UBS Wealth Management Research in a note, adding that it cut its three-month gold price forecast to $1,100-$1,250 and 12-month to $1,300, from $1,350.

Meanwhile, silver XAG= was down 5.2 percent at $15.95 an ounce, after falling to hit its lowest since June 1 at $15.82.Platinum XPT= was 2.8 percent lower at $897.60, after falling to $885, the lowest since early February. Palladium XPD= was down 2.3 percent at $703, after sinking to a one-month low at $693.90. (Additional reporting by Swati Verma and Nallur Sethuraman in Bengaluru; editing by David Evans and Chizu Nomiyama)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Toll due to US wildfires rises to 35; strong winds, low moisture add to firefighters' difficulties
World

Toll due to US wildfires rises to 35; strong winds, low moisture add to firefighters' difficulties

The fires have forced tens of thousands to flee and cast a shroud of smoke that has given Seattle, San Francisco and Portland, Oregon, some of the worst air quality in the world

Department of Justice asks to take over Donald Trump’s defence in defamation lawsuit by rape accuser
World

Department of Justice asks to take over Donald Trump’s defence in defamation lawsuit by rape accuser

The move is in keeping with a DoJ that has time and again advanced a broad vision of executive power and has frequently shielded the president

US Open 2020: Nick Kyrgios takes a dig at Novak Djokovic after his ouster from tournament
Sports

US Open 2020: Nick Kyrgios takes a dig at Novak Djokovic after his ouster from tournament

While most took the Kyrgios's tweet as a light-hearted dig, not everyone was impressed.