Gold has slipped to a 10-month low and investors extended a selloff from bullion-backed funds as the Federal Reserve signaled it will raise interest rates faster than previously expected.
While traders unanimously predicted the Fed would raise borrowing costs on Wednesday, policy makers now expect three increases in 2017, up from the two seen in September.
Gold is being beaten lower by the outlook for U.S. rates and a stronger dollar, while expectations that President-elect Donald Trump will stoke growth through spending has helped push American equities to records. That has spurred investors to dump bullion held in exchange-traded funds.
“The market will stay under pressure for the foreseeable future as we head towards year-end,” David Govett, head of precious metals trading at Marex Spectron Group Ltd. in London, said by e-mail. “ETF selling remains elevated.”
Gold for immediate delivery lost 1 percent to $1,131.34 an ounce by 10:42 a.m. in London, according to Bloomberg generic pricing. Prices touched the lowest since Feb. 3, cutting this year’s gain to 6.6 percent. Higher borrowing costs tarnish bullion’s allure as the metal doesn’t bear interest.
Holdings in gold ETFs dropped by 12.3 metric tons as of Wednesday, the biggest daily outflow in almost two weeks, data compiled by Bloomberg show. Assets have fallen for 24 days to 1,818.3 tons, the lowest since June.
Gold-mining stocks have also been hit. The FTSE/JSE Africa Gold Mining Index fell as much as 6 percent to the lowest since January in Johannesburg. The decline was led by AngloGold Ashanti Ltd. and Harmony Gold Mining Co.
In other precious metals:
Silver slipped as much as 2.7 percent to $16.3839 an ounce. Platinum fell 0.9 percent, while palladium was little changed.
This story was provided by Bloomberg News.