By Ed Ballard
Better-than-expected U.S. economic data reduces the appeal of the yellow metal
Gold prices fell on Monday morning as stocks climbed and traders looked ahead to a U.S. central bank meeting on Wednesday.
The precious metal pulled back 0.4% to $1,31 6.15 a troy ounce in late-morning London trade. The Stoxx Europe 600 index was trading 0.6% higher. The WSJ dollar index, which tracks the greenback against a basket of currencies, fell 0.1%.
“One factor weighing on its [gold] price is the firmer U.S. dollar in the run-up to Wednesday’s meeting of the U.S. Federal Reserve,” wrote analysts at Commerzbank in a note to clients.
A recent run of better-than-expected economic data from the U.S. has strengthened the case for a rate increase, although most market participants still think the central bank is unlikely to act before December. Higher interest rates make yield-bearing assets more profitable, reducing the appeal of gold.
Carsten Menke, a commodities research analyst at Julius Baer, said gold’s slide owed more to “generally improving risk sentiment in financial markets.”
“Equities are up again this morning, rates are somewhat higher, so from that perspective the demand for gold as a safe haven might ease somewhat,” Mr. Menke said.