Gold futures fell 8.10 dollars or 0.71 percent to close at USD 1,125.00 per troy ounce at the COMEX division of the New York Mercantile Exchange.
After posting a slight decline on Monday, retail gold prices remained steady on Tuesday as the U.S. dollar strengthened and speculations about another Fed rate hike later this year cropped up.
On Monday, the gold price gave up some of its recent gains after a rally that kicked off on Thursday in response to a decision by the US Federal Reserve not to raise interest rates.
“Investors don’t want to fight the Fed, and they are keeping gold off the radar”, said George Gero, senior vice president with RBC Capital Market Global Futures.
The higher interest rates would make the gold less competitive in the marketplace, especially less competitive when talking about the more interest-bearing securities. A strong dollar is a bearish signal for commodities like gold, which are traded in the US currency.
Platinum meantime lost 3.4% on the day, pushing the metal – most heavily used to reduce emissions from diesel engines – to its widest discount to gold bullion since the early 1980s as the scandal over VW’s false emissions tests widened beyond the US. Platinum has not been this low since January 2009, and it might even end up going lower in the next few weeks.
“Persistent dollar strength will hamper the precious complex, whilst the timing of the first Fed interest rate rise will also add to the uncertainty and continued volatility”, said MKS Group trader James Gardiner. Gold failed to see a safe-haven boost from a dip in equities. Silver futures plunged 0.465 dollar or 3.06 percent to close at USD 14.74 per troy ounce at the COMEX.
An rate of interest hike will doubtless be applicable this yr given the USA central financial institution’s determination final week to face pat was a “shut name”, Fed policymaker John Williams stated on Saturday.
Market experts believe that the Fed will start raising rates in December after making the decision to maintain the current policy last week. “Probably not in October, but December is still quite possible”.