Gold’s Beaten Down in Worst Week Since May on U.S. Rates Outlook – by Ranjeetha Pakiam (December 8, 2017)

Gold is heading for the biggest weekly drop since May as investors anticipate higher U.S. interest rates and progress on tax reform buoys the dollar, deepening a slump for the metal that touched a one-year high as recently as September.

Bullion for immediate delivery has lost 2.6 percent this week, the most since the period ended May 5. Data on Friday showing the U.S. added more jobs than forecast in November bolstered the case for the Federal Reserve to raise interest rates. The Bloomberg Dollar Spot Index is poised for its biggest weekly advance in a year.

While bullion is still heading for the first back-to-back annual advance since 2012, the rally has stalled this quarter as stock markets hit record highs and the Fed continues tightening monetary policy.

The policy-setting Federal Open Market Committee is widely expected to raise rates at its meeting on Dec. 12-13, which would be the third hike this year, further curbing the appeal for non-interest bearing bullion.

“Gold’s role as a safe haven and a store of value is greatly diminished at this point,” said Barnabas Gan, an economist at Oversea-Chinese Banking Corp. in Singapore. “Market-watchers are likely positioning for an FOMC rate hike next week.

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