Gold News: Gold Falls Again After Fed Hints Interest Rate Hike

Gold News

After having a surprisingly strong October, gold fell back 1.8% to settle at $1,135 an oz, marking the lowest on Monday. The recent fall is a result from the U.S. Federal Reserve had a meeting last week, where they hinted at raising the interest rate.

Gold News

An increase in the interest rate strengthens the dollar, which negatively effects commodities like gold, that don’t bear interest,. With the interest rate already at a record low analysts have been expecting the Federal Reserve to raise the interest rate for the past couple months.  However, uncertainty was created about whether or not there would ever be a rate hike, due to such a long delay. This was what caused Gold’s price to rise in October. The most recent meeting reduced a lot of that uncertainty  as market participants now see the probability of the interest rate increasing by December at 47% and January at 55%.

There is still some room for optimism for gold investors, as the debt ceiling was removed until September 2017. Gold’s price has always had a strong correlation with the national debt. A rise in debt could be the one thing that stops the interest rate from increasing as a high debt could motivate the fed to weaken the dollar.

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