Gold Back Out of Favor With Fed in Focus as Greek Deal Nears
PT. Equityworld Futures – Gold futures fell for the third straight session, falling out of favor with investors as attention shifts away from Greece and back to the outlook for higher U.S. interest rates.
Federal Reserve Governor Jerome Powell suggested Tuesday that rates may rise as soon as September as the economy gains traction. Gold last week posted the biggest advance in a month after Fed officials indicated that monetary tightening will happen at a slow pace, while Greece faced an impasse with its creditors.
The metal’s rally is proving to be short lived. Mounting speculation that Greece will soon reach a deal to avoid default is cutting demand for haven assets. At the same time, signs of improving U.S. economic growth are reigniting concern that the Fed will raise rates soon, boosting the dollar. Higher rates curb gold’s allure because the commodity doesn’t pay interest or give returns like other assets such as bonds and equities.
Gold futures for August delivery declined 0.6 percent to settle at $1,176.60 an ounce at 1:37 p.m. on the Comex in New York. The three-session slump was longest since June 5.
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