Gold at lowest since July ahead of Fed meeting

NEW YORK/LONDON — Gold prices fell to a near five-month low on Tuesday as investors braced for a widely expected US interest rate increase this week and looked for clues about further hikes from the Federal Reserve.

Spot gold fell 0.10% to $1,240.64 an ounce by 1:36 p.m. EST (1836 GMT), after hitting its lowest since July 20 at $1,235.92.

US gold futures for February delivery settled down $ 5.20, or 0.40%, at $1,241.70 per ounce.

Global markets are watching the US central bank’s two- day meeting for clues about the Fed’s future rate path.

“The rise is already in the price so it’s more about the outlook the Fed gives,” said ABN Amro commodity strategist Georgette Boele.

Gold is highly sensitive to rising US interest rates as these increase the opportunity cost of holding non-yielding bullion and boost the dollar, in which it is priced.

Higher equity prices and an increased interest in crypto currencies, including bitcoin, have likely stolen the shine from gold lately, causing prices to break below the most recent trading range, said Josh Graves, senior commodities strategist at RJO Futures in Chicago.

Between mid- October and early-December, gold prices had stayed between $1,265 and $1,300 an ounce.

Among other precious metals, silver dropped 0.30% at $ 15.66 an ounce.

Platinum fell for its eight straight session, down 0.90% at $ 876.60 an ounce, after earlier touching its lowest since February 2016 at $868.80. Platinum is more heavily used in diesel vehicles, which have fallen out of favor since Volkswagen’s emissionsrigging scandal.

Its sister metal, palladium, has benefited from the switch to gasoline engines and expectations for growth in hybrid gasolineelectric vehicles. Palladium was unchanged at $1,010 per ounce.

The platinum discount to palladium widened to around $120 last week, the steepest since April 2001. —