Fed Comments
The election fears overshadowed comments last week from the Federal Reserve that signaled policy makers could start raising U.S. interest rates soon. The odds of a rate increase in December rose to 82 percent Monday from 71 percent a week earlier, futures trading showed. Higher rates curb the appeal of non-interest bearing gold.
Gains for the U.S. labor market could also cap gold’s rally as the economy picks up steam. The monthly jobs report published Friday showed payrolls rose at a steady pace and the broadest rate of unemployment fell to an eight-year low.
“We don’t think this most recent rally in gold will last,” said Sameer Samana, a St. Louis-based global quantitative strategist at Wells Fargo Investment Institute, which oversees $1.9 trillion. If the election ends “without a clear winner and uncertainty extends for days or weeks, that could feed into additional demand for gold,” he said. “To the extent that things will work out in a somewhat orderly way, it should be something that starts to take away the demand for gold.”
This article was provided by Bloomberg