Gold Prices Slip to 8-Week Lows Amid Optimism Over U.S. Economy

Date | 03-10-2017 - 03:19 PM Article Type | Commodities Region | World

PPS - Gold prices slipped to their lowest level in around eight weeks on Tuesday, as growing optimism over the health of the U.S. economy and increasing expectations of a Federal Reserve rate hike in December boosted the dollar and Treasury yields.

Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the greenback.

A stronger dollar can weigh on commodities priced in the currency as it makes them more expensive in other currencies.

Comex gold futures fell to their lowest level since Aug. 9 at $1,271.21 a troy ounce before bouncing back to trade a shade higher at $1,274.81 by 3:00AM ET (0700GMT).

Gold prices ended lower on Monday to notch their second-losing session in a row after upbeat data reinforced expectations that the Federal Reserve will increase U.S. interest rates in December for a third time this year.

The Institute for Supply Management index rose to a near 13-1/2-year high of 60.8 in September, from 58.8 in August. U.S. construction spending also rebounded in August after two straight months of declines, boosted by increases in both private and public outlays.

The dollar stood tall against a basket of six major currencies, reaching its highest level since mid-August in early trade, buoyed by rising U.S. Treasury yields.

With no major economic reports due Tuesday, market players will pay close attention to comments from Fed Governor Jerome Powell at 8:30AM ET (1230GMT) for clues on interest rates.

His comments could take on extra importance after reports surfaced late last week that he had met with U.S. President Donald Trump to discuss his potential nomination as the next Fed chair when Yellen's term ends in February.

Interest rate futures are now pricing in about an 80% chance of a December Fed rate hike according to's Fed Rate Monitor Tool.

Elsewhere on the Comex, silver futures inched down 2.7 cents, or about 0.2%, to $16.62 a troy ounce, their worst level since Aug. 9.

Among other precious metals, platinum tacked on 0.3% to $918.95, while palladium was steady at $911.30 an ounce.

Author: Heang Sovann
Source: Reuters