Gold Falls on Rate-Hike Fears

Gold fell below $1,300 yesterday for the first time since the Brexit vote in June, as the dollar index rose to a two-month high.

The dollar rose amid increasing speculation that the Federal Reserve will raise interest rates by December. Both Federal Reserve Bank of Cleveland President Loretta Mester and Federal Reserve Bank of Richmond President Jeffrey Lacker have come out in favor of higher interest rates. Manufacturing data released Monday was stronger than expected.

Also pushing down gold is the U.S. dollar's rise against the British pound, which fell to a 31-year low against the dollar after the release of a timeline for Britain's exit from the European Union. Aiding gold's woes is a rise in Deutsche Bank shares today, signaling at least a temporary easing of worries over the bank's liquidity, and lessening gold's role as a safe haven.

Cash and Gold Bars

Jason Hamlin of Gold Stock Bull says, "The next key technical support level for gold is $1,255, a level that was both support and resistance in the past. Furthermore, this price support coincides with the 200-day moving average, so it is likely to offer very strong support for the gold price."

Hamlin sees several trends that should be supportive of precious metals, including an increase in the U.S. debt of $1.4 trillion at the end of the 2016 fiscal year, increasing geopolitical tensions with Russia, and Saudi Arabia's threat to dump its U.S. debt holdings.

"With a number of new bullish factors for gold emerging in the past week, it is hard to imagine prices dropping much lower. But in leveraged paper markets with plenty of weak-handed short-term traders, anything is possible," Hamlin added.

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6 thoughts on “Gold Falls on Rate-Hike Fears

  1. Even if they do raise interest rates this year, it would only be by .25 % -- this is supposed to impact the price of gold???

  2. Since Sept. 2011, or just From $ 1921+++ Historical Top of Gold Price, i constantly warn about Bear face continuation, however, Apart from my past several warnings, appeared in this section of INO.COM, all of which are purely based on my study of Gold movement, I would like to repeat the same for one more time, and that is, still long term bear trend is not furnished yet, so bull run is looking far behind, so unless and otherwise we find any firm or reliable turn around signals, to understand or judge all possible future movement of Gold Price, Don't........Don't........Don't........try to co-relate Gold price movement with anything, any factor, any situation, any event or with any comparative measures.

  3. Gold falls on Fed rate hike fears? Cable? A pop in Deutchebank shares? I usually like Lutz's commentary, but come on. That shotgun approach is beneath him. Those "explanations" sound like the ex post facto gropings of a Reuters intern. This decimation has all the hallmarks of a takedown, well-timed for the Chinese holiday. Let's see what happens next week after all the juicy stops have been run near the 200 dma and Asia is back in full force. $1250-ish may not be the end of the slide though -- $1200 may be the goal in this go around, frying the most specs and swearing them off of gold so the big boys can cover and go long again -- but the 200 dma is the first place to look for decent support.

  4. "But in leveraged paper markets with plenty of weak-handed short-term traders, anything is possible," Hamlin added."

    Price manaipulation pure and simple.

    Any article on gold price that does not mention that is at best incomplete. For those naive enough to think it is just becasue gold isn't seen as a safe haven, or some such BS, keep more knowledgeable sources. This is one of several. Really...start educating yourself. But by all means you are free to believe what you want.

  5. I don't believe the crap about interest rates. The Fed's keep talking and never any real change. This, to me is a simple case of Golds price receding below a major trend line that began in Dec /15. Pop! Down it goes. Check your technical analysis.

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