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September Fed Rate Hike Talk Spooks Gold, Silver

September 9, 2016 at 17:33 by Andrew Moran

Gold and silver futures traded lower to end the week as the chances of the Federal Reserve raising interest rates later this month grow.

December gold futures dipped $5.80, 0.43%, to $1,335.80 an ounce at 17:02 GMT on Friday. The yellow metal has fallen three consecutive days, but it is still on track to end the week with a modest 0.8% gain.

Silver also slipped to finish off the shortened trading week. December silver futures tumbled $0.26, or 1.34%, to $19.41 per ounce. Silver was unable to keep the momentum it had earlier this week when it crossed the $20 threshold.

Precious metals settled lower on Thursday because the European Central Bank (ECB) maintained record-low interest rates and pledged to move ahead with its bond-buying initiative until at least March 2017.

Boston Federal Reserve Bank President Eric Rosengren, who has the ability to vote on interest rates, repeated his call for a rate hike. He told an audience at a local chamber of commerce breakfast in Massachusetts on Friday that the recent wave of economic data is clear: a rate hike is warranted.

My personal view, based on data that Water Bounce Houses we have received to date, is that a reasonable case can be made for continuing to pursue a gradual normalization of monetary policy.

Also, Fed Governor Daniel Tarullo told CNBC on Friday that a rate hike is quite possible. He did note, however, that he would like to see some more inflation before the central bank moves ahead with raising rates.

The latest comments from the Fed officials impacted gold prices. The market is trying to comb through every statement made by central bank heads prior to the crucial Federal Open Market Committee (FOMC) meeting on September 20 and 21 – it will have two more meetings afterwards: November 1 and 2 and December 13 and 14.

These remarks helped push up the US dollar, which applied even more pressure on dollar-denominated gold prices.

In a strong dollar, rising-rate environment, gold becomes less attractive to both domestic and foreign investors. Since the yellow metal does not pay any interest, traders look elsewhere for yield, such as bonds, oil, and stocks.

If you have any questions and comments on the commodities today, use the form below to reply.

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