The precious metal fell to a
three-week trough on Wednesday, extending overnight losses in North American
trade as possibilities for the Federal Reserve to raise interest rates in
latter 2016 were rekindled. Contributing
to the gold slump are also the positive US economic outlook and US stock
futures gains brought by upbeat earnings results.
These renewed expectations and
optimistic economic picture boosted the greenback and thus, dragged down gold
prices.
Bill O’Neill, a broker at LOGIC
Advisors, said that: “Gold had everything going for it. Now we’re in a period
where things are a lot calmer… The perfect playing field that existed for gold
is not in play for the short term.”
On the Comex division of the New
York Mercantile Exchange (NYMEX), gold sank 1.2% to a low of $1,316.00 a troy
ounce, a level last touched in June 30 during the period Britain voted to leave
the European Union. It last traded at $1,318.70 by 12:38 GMT, down 1.02%.
Nonetheless, the yellow metal
remained supported amid talks that European and Asian central banks will ramp
up monetary stimulus in the coming months to counter the negative economic
shock by the British referendum last June 23.
Expectations for monetary
stimulus tend to boost gold as the bullion is considered a safe-haven asset and
inflation hedge.
