Gold Price & Other Precious Metals Slide as Bets on Higher US Rates Erode Demand

New York (Sept 12)  Gold futures headed for a fourth straight decline and nickel led a selloff in industrial metals amid concern that the Federal Reserve is moving closer to raising U.S. interest rates.

Fed Governor Lael Brainard, who has argued for patience in raising rates, is set to discuss the economic outlook on Monday. The speech is the last scheduled appearance by a central banker before this month’s policy meeting, and comes after Boston Fed President Eric Rosengren said the economy could overheat if policy makers wait too long.

Odds of an interest rate hike this year were at 58 percent, up from 36 percent at the start of August. Higher rates reduce the appeal of gold, which doesn’t pay interest or offer returns like assets such as bonds or equities. The dollar headed for a fourth straight gain, making commodities such as copper more expensive for holders of other currencies.

“The metals are under a lot of pressure right now,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “Today’s one of the last days Fed officials can speak before they go into their quiet period, so it seemed like coming into this time frame they were very vocal about raising rates.”

Gold futures for December delivery slid 0.6 percent to $1,327.20 an ounce at 11:18 a.m. on the Comex in New York. A fourth straight loss would be the longest slump in two months.

Bullion has gained 25 percent in 2016 as a slowdown in global growth and the U.K.’s vote to exit the European Union boosted the metal’s appeal as a haven. Investors will be drawn to the metal even if the Fed lifts rates, as borrowing costs will still be near historic lows, David Mazza, the head of exchange-traded-fund and mutual-fund research at State Street Global Advisors, said in an interview on Friday.

In other metals:

•Copper futures for delivery in December were little changed at $2.0935 a pound on the Comex in New York.
•On the London Metal Exchange, aluminum, zinc, lead and tin fell, while copper was little changed. Nickel slid 3 percent, heading for its biggest decline in a month.
•Silver futures for December delivery fell 1.8 percent to $19.02 an ounce on the Comex.
•On the New York Mercantile Exchange, platinum and palladium
 dropped.

Source: Bloomberg