EconomyCommodities
Gold holds below $4,000 for the first time since July as Fed rate-rise bets harden
The metal was flat at $3,996 an ounce in early Asian trade on Monday, about $170 below where it ended on 16 October, with markets now seeing a December rise by the Fed as likely.
Key points
- Gold was flat at $3,996 an ounce on Monday morning, below $4,000 for the first time since July.
- It had closed near $4,166 on Friday, 16 October.
- ANZ's Daniel Hynes puts the chance of a December Fed rate rise at 78%.
Gold stayed below $4,000 an ounce in early Asian trade on Monday, a level it had not been under since July, as investors braced for a week of central bank decisions and grew more certain that US interest rates are heading higher.
The metal was flat at $3,996 an ounce by 4:55 am IST. It had closed near $4,166 on 16 October, which puts its fall over ten days at about $170.
Why gold is losing its shine
Gold pays no interest, so it tends to suffer when the returns on bonds and cash rise. The US Federal Reserve raised rates in September for the first time since 2023 and signalled that another increase was likely this year. The 10-year US Treasury yield stands at about 5%.
Markets expect the Fed to leave rates unchanged when it announces its decision at 11:30 pm IST on Wednesday, but they are betting on a rise in December. ANZ’s Daniel Hynes puts the chance of a December increase at 78%.
The dollar was steady on Monday morning against other major currencies.
What it means in India
For Indian buyers, who pay for imported gold in dollars, the rupee price depends on both the global rate and the exchange rate. The rupee ended Friday at a provisional 94.93 to the dollar, and domestic prices will reflect both when trading opens on Monday.
The week’s calendar gives gold several tests. After the Fed, the US publishes its first estimate of third-quarter growth and September’s PCE inflation index on Thursday, and the European Central Bank and the Bank of Japan announce decisions on Thursday and Friday.