Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Gold falls sharply, as inflation data bolsters case for rate hike

CommoditiesSep 28, 2015 01:02PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
Gold fell by more than 1% on Monday to drop below $1,135 -- Gold futures fell sharply on Monday amid a wavering dollar, as relatively optimistic personal income data reinforced the argument for an imminent interest rate hike by the Federal Reserve.

On the Comex division of the New York Mercantile Exchange, gold for December delivery traded in a broad range between $1,127.50 and $1,147.80 a troy ounce before settling at $1,133.60, down $12 or 1.05% on the session. Last week, gold peaked at a September high of $1,155 an ounce after Fed chair Janet Yellen said it is likely the U.S. central bank will raise its benchmark Federal Funds Rate at some point this year. In spite of a volatile month of trading, gold futures are up roughly 1% in September after opening the month around $1,125 an ounce.

Gold likely gained support at $1,104.10, the low from Sept. 14 and was met with resistance at $1,149.80, the high from Sept. 25.

On Monday morning, the U.S. Department of Commerce's Bureau of Economic Analysis (BEA) said its Personal Consumption Expenditure (PCE) Index increased by $54.9 million or 0.4% in August, or at the same rate as its increase a month earlier. Personal income rose by 0.3% last month, following an upward revision of 0.1% in July to 0.4%.

The Core PCE Index, which strips out food and energy prices, increased 0.4% on a month-over-month basis, on the back of strong gains in durable goods and motor vehicles and parts. It follows an increase of 0.3% in July.

On a yearly basis, Core PCE inched up 0.1% from its July level to 1.3% over the last 12 months. The Core or Real PCE Index is the Fed's preferred gauge for inflation, as it decides whether to raise short-term interest rates for the first time in nearly a decade. Long-term inflation has remained under the Fed's targeted goal of 2% in every month for the last three years.

Last week at a speech at the University of Massachusetts at Amherst, Yellen noted that the inflation shortfall is likely to be transitory, as one-off factors such as lower energy prices and weaker imports due to a stronger dollar abate. Yellen added that inflation should reach the Fed's 2% target when the labor market returns to full employment.

Gold, which is not attached to interest rates or dividends, struggles to compete with high-yield bearing assets in rising rate environments. Separately, New York Fed president William Dudley told the Wall Street Journal on Monday that the Fed is on track to hike rates before the end of the year and could reach its targeted goal for inflation at some point in 2016. In its inflation forecasts earlier this month, the Fed estimated that inflation would reach 1.7% by the end of next year and not hit 2.0% until 2018.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.20% to an intraday low of 96.04 on Monday. Last week, the index surged above 96.85 to reach its highest level in September.

Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.

Silver for December delivery plunged 0.556 or 3.68% to 14.555 an ounce.

Copper for December delivery fell 0.035 or 1.53% to 2.249 a pound.

Gold falls sharply, as inflation data bolsters case for rate hike

Related Articles

Crude Oil Edges Higher; Mixed Covid News
Crude Oil Edges Higher; Mixed Covid News By - Jul 27, 2021 1

By Peter Nurse -- Crude oil prices edged higher Tuesday, stabilizing after Monday’s fall on optimism the global demand recovery will overshadow a resurgence in...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email