Spot gold eased 0.2% to $4,007.29 an ounce by 03:21 GMT on Tuesday, and December US gold futures fell 0.5% to $4,019.70, as a firmer dollar took the bid out of bullion before Wednesday's Federal Reserve decision. CNBC said the dollar was near a one-week high. Ilya Spivak, head of global macro at Tastylive, said gold was still digesting Friday's range after last week's drop. "If we can get a break through $3,900, we're in for a pretty significant further decline, maybe to test the $3,800 area," he said. That is a step down from Monday, when spot gold reclaimed $4,014 after a Friday low of $3,975, as we wrote in yesterday's commodities note.
A December hike is still the gold trade
Bullion fell under $4,000 last week for the first time since mid-July and posted a weekly loss of about 4%, its worst in roughly four months. Higher energy prices fed inflation worries and rate-hike bets. CME FedWatch, as cited by CNBC, priced about an 11% chance of a hike at this week's meeting and about an 82% chance of an increase in December. Policymakers have signalled they will not lift short-term rates again on Wednesday. Investors do not think that pause will last. Thursday's Personal Consumption Expenditures report is the inflation print the Fed watches against its 2% goal. Gold can hedge inflation, but a higher policy rate raises the cost of holding a metal that pays nothing.
Brent stays near $115, and the other metals slip
Oil did not give gold much help. Brent crude futures were down 66 cents, or 0.57%, at $115.15 a barrel, and US West Texas Intermediate was down 44 cents, or 0.43%, at $101.32, Moneycontrol reported via TradingView, with traders leaning on hopes of progress toward an Iran settlement. A separate tally had Brent nearer $114.80. Either print is still well above the $110 first touch from 17 October. The Saudi-led coalition in Yemen said it intercepted three ballistic missiles and drones launched by the Houthis toward two regions of Saudi Arabia, CNBC reported, so the supply risk has not gone away. Spot silver slid 0.7% to $53.53. Platinum lost 0.8% to $1,514.16. Palladium dropped 1.5% to $1,034.75. Bitcoin, back near $79,800 in today's market lead, is trading the same rate story. A hold above $4,000 keeps last week's low intact. A break of $3,900 would open the $3,800 test Spivak named. Follow both tapes in our commodities coverage.