Investing.com – Gold prices fell sharply on Wednesday amid a rally in the dollar on the back of rising expectations of a year-end rate hike and tax reform.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange fell by $13.18, or 1.02%, to $1,288.46 a troy ounce.
Expectations grew that tax reform will be implemented sooner rather than later supporting a move higher in dollar, pressuring gold prices as Republicans in the U.S. Congress and the White House unveiled plans to change America’s tax code in a proposal that slashes taxes on businesses the wealthy.
Dollar-denominated assets such as gold are sensitive to moves in the dollar – A rise in the dollar makes gold expensive for holders of foreign currency and thus, reduces demand.
That added further pressure on the yellow metal amid an uptick in expectations for a Federal Reserve rate hike later this year following economic data showing the economy continued to strengthened.
The Commerce Department said on Wednesday non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.9 % last month after an upwardly revised 1.1% increase in July.
The housing sector, however, continued to weaken as The National Association of Realtors’ pending home sales fell 2.6% to 106.3 in August. That was the lowest reading since January 2016.
According to investing.com's fed rate monitor tool, nearly 80% of traders expect a December rate hike, compared to about 60% a week ago.
In other precious metal trade, silver futures fell 0.29% to $16.83 a troy ounce while platinum futures lost 0.38% to $925.20.
Copper traded at $2.93, up 0.34% while natural gas rose by 2.13% to $3.064.