Gold Rises Ahead of Fed Meeting

Published on: 13 Dec, 2017

Gold price rose slightly as investors are closely watching the Federal Reserve meeting this week.

Spot gold rose 0.18 percent to $1,244.24 per ounce during Tuesday’s trading session. It rebounded from a near five-month low. While gold future for February delivery was little changed, trading at $1,246.30 an ounce.

The market is focused on the U.S. central bank's two-day meeting beginning on Tuesday. Investors are looking for clues about the Fed’s future rate hike schedule.

Gold is highly sensitive to the changes in U.S. interest rates as a higher rate will increase the opportunity cost of holding non-yielding bullion.

"The rise is already in the price so it's more about the outlook the Fed gives," said ABN Amro commodity strategist Georgette Boele, Reuters reported.

Gold price has been under pressure in the recent weeks as the market expected the Fed will increase the interest rate in December. In addition, the increasing interests in cryptocurrency has attracted more institutional investors and gold investors.  

"(The) opportunity cost of holding gold is going up because if you hold gold then you miss the opportunity of higher equity prices or maybe higher bitcoin prices," said Societe Generale's head of metals research Robin Bhar, "Gold doesn't have a lot of love going forward at the moment."

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Marco Zhou

Email: Marco@financialinsiders.com

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