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Gold prices weaker in Asia on outlook for Fed rate hike

Published 10/06/2014, 06:56 PM
Updated 10/06/2014, 06:59 PM
Gold weaker in Asia

Investing.com - Gold prices eased in Asia on Tuesday, continuing a weak trend as expectations grow for a rate hike by the Federal Reserve next year.

On the Comex division of the New York Mercantile Exchange, Gold for December delivery traded at $1,206.70, down 0.10%.

Overnight, gold futures inched higher, but held below the key $1,200-level as upbeat U.S. employment data underlined optimism over the strength of the economy and fuelled expectations that the Federal Reserve will begin to raise rates sooner than previously thought.

Gold and silver recovered as the U.S. dollar took a breather from its recent rally against a basket of other major currencies sparked by upbeat U.S. employment data.

The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, traded at 85.87, down 0.03%.

A weaker dollar boosts demand for raw materials as an alternative investment and makes dollar-priced commodities cheaper for holders of other currencies.

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.

Comex Copper prices were flat at $3.037 a pound, amid speculation weakening economic growth in China will reduce demand for the industrial metal.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

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