Gold Prices Aim Lower as Expected Fed Rate Hike Path Steepens

GOLD CRUDE OIL TALKING POINTS:

  • Gold prices fall as Fed rate hike bets swell, US Dollar advances
  • Risk aversion may cap bond yield gains, offering gold a lifeline
  • Crude oil prices fall on EIA inventories data, souring sentiment

Gold prices edged lower as the US Dollar rose while the priced-in 2019 rate hike path implied in Fed Funds futures steepened. That reflected a hawkish tone in minutes from September’s FOMC meeting. Officials were unanimous in their support for gradual tightening and some signaled that rates may need to rise beyond the “long-run” level, implying that policy might need to become pro-actively restrictive.

Meanwhile, sentiment-sensitive crude oil prices declined amid broad-based risk aversion. Bellwether SP 500 futures began to drop alongside the British Pound in early European trade Wednesday, seemingly reflecting worries that a Brexit deal pitch by UK Prime Minister Theresa May at the EU leaders’ summit will come to naught yet again.

Selling pressure was compounded after EIA inventory data showed stockpiles unexpectedly added 6.49 million barrels last week. That trounced consensus forecasts calling for a modest 909k barrel

Article source: https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/commodities/2018/10/18/Gold-Prices-Aim-Lower-as-Expected-Fed-Rate-Hike-Path-Steepens.html