Spot gold is down over $10 an ounce in early New York trading this morning, extending the losing streak to a sixth day. Markets are increasingly nervous over what appears to be a likely interest rate hike by the Fed this December. This will be the last chance for the Fed, which has been battered by a loss of trust by the markets, to make good on its promise to raise rates in 2015.
Today’s action sees gold down almost 1% and breaking under a bullish price channel that has been in effect since late July. Prices are trading in the $1,123 range as a “Fed triple header” is lined up for tomorrow. Fed chairman Janet Yellen speaks before the House Financial Services Committee on Capitol Hill at 10zm, followed by NY Fed president William Dudley at 2:30pm, and Fed Vice-Chairman Stanley Fischer at 7:30pm.
Bonds are seeing the same flight over rate hike fears that gold is. Yields on Treasuries jumped Monday to highs last seen in September. News that the US government will be borrowing more in the fourth quarter than was previously estimated is also weighing on bonds, as this means more bonds being sold by the Treasury Department.
News that the company building the Keystone XL pipeline has requested that the US State Department suspend review of its building permit is helping support crude oil and energy companies. The company, TransCanada, is seeking the nine to twelve month delay until it can iron out long-standing differences with the state of Nebraska. The pipeline would cross Nebraska on its way from Canada to the Gulf of Mexico. Liberals claim that this is a ploy by the company to wait for a possible Republican President after the 2016 elections, and urged Obama to immediately kill the project.
News that oil refineries on the East Coast are importing oil from overseas as fracking output drops in the Bakken shale fields is also helping oil prices.
While earnings are affecting individual stock prices, the Fed interest rate question is the #1 factor for nearly asset class. Expect volatility throughout the day tomorrow, and the various senior Fed officials speak.
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