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Gold prices dip in early Asia with focus on Federal Reserve

Published 11/16/2014, 07:24 PM
Updated 11/16/2014, 07:25 PM
Gold weaker in Asia

Investing.com - Gold prices fell in Asia on Monday as investors focused on expectations for the Federal Reserve to hike interest rates next year.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at $1,182.80 a troy ounce, down 0.24%.

Silver futures for December delivery eased 0.53% to $16.227 a troy ounce after soaring more than 4% on Friday.

Copper for December delivery fell 0.05% to $3.043 a pound by a close of trade, after upbeat U.S. retail sales and consumer sentiment data indicated that the economic recovery is gaining momentum.

Despite Friday's upbeat performance gold prices are likely to remain vulnerable in the near-term amid indications a strengthening U.S. economic recovery will force the Federal Reserve to start raising interest rates sooner and faster than previously thought.

The Commerce Department said Friday that U.S. retail sales rose 0.3% in October, ahead of forecasts for a 0.2% increase.

A separate report from the University of Michigan showed that its consumer sentiment index rose to a seven year high of 89.4, better than forecasts of 87.5 and up from October’s reading of 86.9.

Comex gold prices have been under heavy selling pressure in recent weeks amid speculation the Federal Reserve is moving closer to raising interest rates for the first time in eight years after ending its monthly bond-buying program, also known as quantitative easing, last month.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

In the week ahead, investors will be focusing on Wednesday’s minutes of the Federal Reserve’s October meeting and Thursday’s report on the U.S. consumer price index.

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