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halcroon Sep 17, 2015 1:20pm
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Gold pulls back ahead of Fed decision
Gold pulls back ahead of Fed decisionhttps://www.wsj.com/articles/gold-prices-down-as-markets-wait-for-fed-decision-1442485620
Gold Pulls Back Ahead of Fed Decision
By Ese Erheriene
Updated Sept. 17, 2015 9:50 a.m. ET
Investors stay on sidelines ahead of U.S. central banks decision on interest rates
Gold prices were slightly lower on Thursday, as nervous investors stayed on the sidelines ahead of the Federal Reserves decision on whether it will raise interest rates for the first time in nearly a decade.
The most actively traded contract, for December delivery, was recently trading down $2.60, 0.2%, at $1,116.20 a troy ounce on the Comex division of the New York Mercantile Exchange...
...Expect a huge decline in gold prices if the FOMC hikes rates, Howie Lee, an investment analyst at Phillip Futures, said in a note.
A rate increase hurts gold because the metal doesnt offer a yield and has a harder time competing with interest-yielding assets, like Treasurys, when rates are climbing. Higher interest rates would also likely strengthen the dollar. Gold is widely traded in dollars, so it becomes more expensive to buy in other currencies, like rupees or yuan, when the greenback gains.
While most analysts dont think there will be any change in interest rate policy before December, markets are likely to remain jittery until this is confirmed.