Gold Down on Fed Rate Hike Expectation

Posted By: Religare
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Gold futures closed lower in the international market on Tuesday as comments by U.S. Federal Reserve Chairwoman Janet Yellen reinforced expectations for another interest-rate increase before the end of the year.

Gold Down on Fed Rate Hike Expectation

Rising real interest rates lower the opportunity costs of holding gold because the metal provides no yield, and entices investors to rotate into riskier assets like stocks. Higher rates may also boost the value of the dollar which usually moves in the opposite direction of the gold price.

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