Gold drops to 6 year low as Fed rate hike looms
Adam Pike, News Editor
3 Dec 2015, 11:07 a.m.
The gold price valued in U.S dollars dropped to a six year low on Thursday as investors anticipate a December rate rise. At one point the gold price fell to $1,045.40 per ounce.
Janet Yellen, head of the Federal Reserve said the Fed is likely to increase rates this month citing improvement in the labour market and signs inflation is returning to their 2% target.
Yellen is likely to reaffirm her comments later today when she addresses the Joint Economic Committee. After months of speculation the Fed will finally announce their decision on the 16th of December.
Gold traders will also be scrutinising the outcome of today’s ECB meeting where President Mario Draghi is expected to introduce a raft of new policy measures. With growth sluggish and inflation subdued throughout the Eurozone, many are expecting the ECB to cut their deposit rate from -0.30% to -0.2% and increase its monthly QE program to 75 million euros. Historically, the gold price rises when Central Banks print money, however, this is yet to materialise.
Since the start of November the gold price has retreated 8% on expectations the Fed will raise rates for the first time in 8 years. With non-government data pointing to a slowdown in the economy many doubt the U.S economy can survive an increase in the cost of borrowing.
The silver price fell below $14 per ounce despite the U.S. mint reporting record demand for their popular 1 oz. silver American Eagle coin.
The gold price is currently trading at £703.53 per ounce, silver £9.34 per ounce, platinum £556.89 per ounce and palladium £356.68 per ounce.