Gold prices fell Tuesday, as the Federal Reserve kicked off a two-day meeting that many investors believe will culminate in a rate increase.

Gold for February delivery closed down 0.6% at $1159 a troy ounce on the Comex division of the New York Mercantile Exchange.

Federal-funds futures showed that traders assigned a 97.2% probability that the central bank will raise rates at the end of its monetary policy meeting Wednesday, according to the CME. Gold struggles to compete with yield-bearing investments when rates rise.

Prices for the metal are down around 16% from their highs of the summer, as an improving U.S. economy and expectations of ramped up fiscal spending under a new presidential administration bolster the case for the Fed to raise rates at a faster clip next year.

“Gold may not be able to have a clear shot at going substantially higher until the conclusion of the (Fed meeting) on Wednesday,” analysts at HSBC wrote in a note to investors.

Source: The Wall Street Journal

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