MTECHTIPS:-Gold inches higher but December rate hike expectations weigh
MTECHTIPS- Gold futures inched higher in early Europe trading on Wednesday, but gains were limited amid mounting expectations that the Federal Reserve will hike interest rates next month. Gold for December delivery on the Comex division of the New York Mercantile Exchange tacked on $3.10, or 0.25%, to $1,227.60 a troy ounce by 3:50 AM ET (08:50 GMT). It posted a modest gain of 0.2% the day before. Market analysts warned that the outlook for gold remains cloudy in the near-term. Prices of the yellow metal are down more than 6% over the past week amid optimism that increased fiscal spending and tax cuts under a Trump administration will spur economic growth and inflation, which would ultimately lead to an era of higher interest rates. Investors are currently pricing a 90.6% chance of a rate hike at the Fed’s December 13-14 meeting, according to Investing.com’s Fed Rate Monitor Tool. The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced. The greenback hovered close to an 11-month high against a basket of major currencies early on Wednesday, supported by expectations of rising rates. The dollar index was recently up 0.1% at 100.29, after climbing to 100.34 earlier, the most since December 2015. If it rises above 100.51, it would reach its highest level since April 2003. A stronger U.S. dollar usually weighs on gold, as it dampens the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.