Gold Prices Inches Higher Snaps Biggest Three-Day Drop but December Rate Hike Expectations Weigh

Gold Prices Inches Higher Snaps Biggest Three-Day Drop but December Rate Hike Expectations Weigh

Gold futures prices surged higher in trading on Wednesday, severed its biggest decline in a day to three days in more than a year, but gains were limited amid mounting expectations that the Fed will raise interest rates next month.

Gold for December delivery on the Comex tacked on $3.10, or 0.25%, to $1,227.60 a troy ounce. It reached the lowest since June on Monday.

Market analysts cautioned that the forecast for gold remained cloudy in the near term. Rising yellow metal prices have fallen more than 6% over the past week amid optimism that increased fiscal spending and tax cuts under the Trump management and stimulate economic growth and inflation, which would eventually lead to an era of rising interest rates.

Investors are currently estimated at 90.6% chance of an interest rate hike at the Fed’s December 13 to 14 meeting, according to the Investing.com.

Trump win challenged most forecast are based elections for gold in the ups and hedge funds were among those who signed the wrong end of the election result. The fund managers increased their net long position in gold by 2.2 percent in the week ended November 8, before prices fell, showing the US government data.

Holdings in exchange traded funds backed by gold declined 4.88 metric tons to 1,966.3 tons as of Monday, capping the biggest drop for three days in more than three years, data compiled by Bloomberg.

At the Multi Commodity Exchange, gold for delivery in December rose by Rs 70 or 0.24 per cent to Rs 29,390 per 10 gram as participants created fresh positions, tracking a firm trend overseas.

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