Metals: Gold falls as investors bet on higher interest rates

by The Wall Street Journal

June 15, 2017 | 12:32 am
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Gold prices fell for the fifth day in a row May 13, as the prospect of higher interest rates outweighed concerns about political risk.

Gold for August delivery was recently down 0.4% at $1,263.80 a troy ounce on the Comex division of the New York Mercantile Exchange, on track for its lowest close since May 25.

Investors have sold off positions in gold as the market expects the Federal Reserve to raise short-term interest rates at the meeting this week.

“Heightened geopolitical uncertainty and political risk buoyed both longer-term investor interest and tactical positioning in gold, but interest started to wane as focus shifted to the June FOMC meeting,” Standard Chartered analysts said in a Monday note.

Traders will be watching the announcement following the policy meeting Wednesday for further clues on future interest rate increases. The Fed has signaled that it wants to raise rates as many as three times this year, but some analysts speculate that political tensions may keep the central bank from raising rates later this year.

“What will be more important is how many [rate increases] the Fed will say are necessary beyond June, and how and when they’re going to happen,” Société Générale ’s Robin Bhar said.

Meanwhile, copper prices remained under pressure. Futures for July delivery fell 0.8% to $2.5925 a pound in New York, trading near a one-week low.

London Metal Exchange stocks of copper increased, Marex Spectron’s Alastair Munro said, indicating heightened supply. This coincided with the release of Peruvian production data, with cumulative production for the year up 7.5% year-over-year as of April, according to ING.

Copper prices may have more room to fall, Sucden’s Liz Grant said. Reassuring Chinese import data and supply-side issues in Indonesia and Chile last week led to overly bullish trading activity, she said.

The Wall Street Journal

by The Wall Street Journal

June 15, 2017 | 12:32 am
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