Share

Gold slips as US rate hike woes surface

Singapore - Gold retreated on Monday, after posting its biggest weekly gain in two months, amid expectations the US Federal Reserve is moving closer to raising interest rates.

The Fed holds a policy meeting this week and a recent spate of data that points to a strengthening economy could sharpen the case for the central bank to take a more hawkish stance.

The latest upbeat evidence came on Friday when the Thomson Reuters/University of Michigan index of consumer sentiment jumped to a near eight-year high in December.

There is speculation in the market that the Federal Open Market Committee (FOMC) might remove the phrase "considerable time" in its statement after the meeting with regard to the time frame for raising interest rates, said Howie Lee, investment analyst at Phillip Futures.

Possible rate hike

"If they were to remove that phrase, I think they're trying to prepare the market for an eventual rate hike and that could send gold further down," said Lee, who pegs support for bullion at $1 140.

The FOMC is expected to release a statement at the end of its two-day meeting on Wednesday, its last for the year, followed by a news conference by Fed chair Janet Yellen.

Spot gold was down 0.3% at $1 218.80 an ounce by 06:38 GMT. The metal climbed 2.6% last week, its largest such rise since October.

A hike in US interest rates curbs appeal of non-interest bearing assets such as gold.

Investors were also cashing in recent gains after gold failed to convincingly breach the $1 235 key resistance level, said Lee.

US gold for February delivery slipped 0.3% to $1 219.30/oz.

Hostage crisis

Investors were also keeping an eye on Australia where police locked down the centre of the country's biggest city on Monday after an armed assailant walked into a downtown Sydney cafe, took hostages and forced them to display an Islamic flag, igniting fears of a jihadist attack.

READ: Aus central bank staff safe amid hostage drama

Prime Minister Tony Abbott said there were indications the hostage situation at the cafe was politically motivated.

Australia, which is backing the United States and its escalating action against Islamic State in Syria and Iraq, is on high alert for attacks by radicalised Muslims or by home-grown fighters returning from fighting in the Middle East.
 

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.88
+0.3%
Rand - Pound
23.86
+0.2%
Rand - Euro
20.39
+0.2%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders