Gold Futures Prices Dim on Dampened Rate Hike Expectations

December 31, 2016 12:23PM CST

Gold futures prices are in dimming as markets awaited further clues on the timing of an interest hike by the U.S. Federal Reserve, and as the U.S. Presidential election results loom.

December gold futures fell .35 percent to $1,263.3 an ounce at the start of the week in commodities futures trading on Monday. The rest of the metals sector of commodities futures resisted price pressure, with December silver futures up .58 percent at $17.595 an ounce and December copper futures up .14 percent at 2.0915 an ounce. December platinum futures were 1.73 percent higher at $947 an ounce, and December palladium futures up .51 percent at $623.90 an ounce.

On Monday, James Bullard, president of the Federal Reserve Bank of St. Louis and a voting member of the Federal Open Market Committee, said the nation is facing a low interest rate environment for up to three years.

San Francisco Fed President John Williams on Friday repeated a need for an interest rate hike this year, and added that he had pressed for it to occur last month.

Gold is highly sensitive to rising U.S. interest rates, which boosting U.S. dollar futures prices, as gold is priced by the USD. On Friday, gold futures finished a few cents higher despite dollar strength to gain about 1 percent for the week.

Most commodities futures markets analysts are not factoring in a rate hike at the Fed’s November meeting, and consider December as more likely for a move. Commodities futures markets are pricing in only a 9 percent chance for a 25 basis point hike in November, with an approximate 70 percent chance in December, according to the CME Fedwatch tool. A 79 percent chance is factored in for the June meeting.

Monday’s economic calendar in the U.S. is empty of data of great significance to the commodities futures markets. Tuesday brings the Consumer Confidence report for October, while Wednesday’s lineup includes September New Home Sales data and Weekly Crude Oil Inventories. On Thursday, Durable Goods Orders for September are released, as well as weekly data for Natural Gas and unemployment claims.

On Friday, commodities futures market participants will keep eyes on the third-quarter GDP and Chain Deflator reports. The Q3 Employment Cost Index and October Michigan Consumer Sentiment reports are also on the calendar.

Gold Daily

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