By Kevin Crowley and Ranjeetha Pakiam
Gold fell, extending the first back-to-back weekly drop since May, as buoyant equity markets and expectations for higher U.S. interest rates hurt demand.
Federal Reserve policy makers meet Tuesday and Wednesday and signs of strength in the U.S. economy have prompted traders to increase bets on a rate increase. They’re pricing in a 45 percent chance of a move by December, up from 12 percent at the start of the month. Higher rates are typically negative for gold because the metal doesn’t pay interest.
“The economic cycle is still healthy in the U.S., putting the Fed on track for an interest-rate hike,” Thorsten Proettel, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart, said by phone. He expects a move in early 2017. “Gold has risen too much too quickly. Right now, everything speaks for a consolidation of the gold price.”
Bullion lost 0.3 percent to $1,318.98 an ounce by 11:31 a.m. in London, according to Bloomberg generic pricing. The metal declined 1.1 percent last week and is up 24 percent this year.