Metals: Gold Falls on Interest-Rate Concerns

FeaturesDow Jones Newswires

Gold prices were lower Thursday, as some investors took profits following a recent run-up in prices.

Gold for February delivery fell 0.6% to $1,331.00 a troy ounce on the Comex division of the New York Mercantile Exchange, on track to end a five-session winning streak. They have risen to their highest level since September recently, boosted by a weaker dollar.

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The U.S. currency's decline makes gold and other dollar-denominated commodities cheaper for overseas buyers. However, gold fell Thursday even with the dollar falling. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, slipped 0.4%.

A recent surge in stocks and Treasury yields led some investors to take profits after the recent gold rally, said George Gero, managing director at RBC Wealth Management.

A day after the Dow Jones Industrial Average closed above 26000 for the first time, the yield on the benchmark 10-year was on track for its first close above 2.60% since March. Some analysts have said more investors are wagering that the Federal Reserve will stick to its forecasts for three interest-rate increases this year following recent comments from central-bank officials and economic data.

Roughly 60% of traders expect at least three rate increases this year, compared with about 45% a week ago, according to CME Group data. Those expectations could be a bearish development for gold, which often struggles to compete with yield-bearing assets like Treasurys as borrowing costs rise.

"Everything seems to be pretty well priced in, which has been another reason for some profit-taking," Mr. Gero said.

Still, some analysts expect geopolitical risks and inflation expectations to continue supporting gold moving forward. The precious metal is often used as a hedge against a downturn in markets and a hedge against higher consumer prices.

Among base metals, copper for March delivery rose 0.5% to $3.2060 a pound. The industrial metal has fallen more than 3% off its nearly four-year highs from late December, but got a boost Thursday from data showing China's economy expanded at 6.9% last year, the country's first growth acceleration in seven years.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and David Hodari at David.Hodari@dowjones.com

Gold prices fell Thursday, as some investors took profits following a recent run-up in prices.

Front-month gold for January delivery fell 0.9% to $1,326.00 a troy ounce on the Comex division of the New York Mercantile Exchange, snapping a five-session winning streak. Prices have risen to their highest level since September recently, supported by a weaker dollar.

The U.S. currency's decline makes gold and other dollar-denominated commodities cheaper for overseas buyers. However, gold fell Thursday even with the dollar falling. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, declined 0.3%.

A recent surge in stocks and Treasury yields led some investors to take profits after the recent gold rally, said George Gero, managing director at RBC Wealth Management.

A day after the Dow Jones Industrial Average closed above 26000 for the first time, the yield on the benchmark 10-year was on track for its first close above 2.60% since March. Some analysts have said more investors are wagering that the Federal Reserve will stick to its forecasts for three interest-rate increases this year following recent comments from central-bank officials and economic data.

Roughly 55% of traders expect at least three rate increases this year, compared with about 45% a week ago, according to CME Group data. Those expectations could be a bearish development for gold, which often struggles to compete with yield-bearing assets like Treasurys as borrowing costs rise.

"Everything seems to be pretty well priced in, which has been another reason for some profit-taking," Mr. Gero said.

Still, some analysts expect geopolitical risks and inflation expectations to continue supporting gold moving forward. The precious metal is often used as a hedge against a downturn in markets and a hedge against higher consumer prices.

Among base metals, front-month copper for January delivery rose 0.3% to $3.1770 a pound. The industrial metal has fallen 3.3% off its nearly four-year highs from late December, but got a boost Thursday from data showing China's economy expanded at 6.9% last year, the country's first growth acceleration in seven years.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and David Hodari at David.Hodari@dowjones.com

(END) Dow Jones Newswires

January 18, 2018 15:11 ET (20:11 GMT)

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