While some may argue that the low inflation below the Fed’s 2% target would keep rates depressed for the time being, the Fed believes the drop in oil prices is only temporary. Consequently, the central bank will likely determine policy based on core inflation, which excludes food and energy costs and rose 0.1% November to 1.7%.
Money managers are already reducing their positions in gold, with Comex futures and options falling for the first time in five weeks for the week ended Dec. 16. Comex gold futures are now trading around $1,179.6 per ounce.
“The overall environment is very negative for gold,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates, said in the Bloomberg article. “The market will remain volatile as trading will be very thin for the next two weeks.”
SPDR Gold Shares
For more information on the gold market, visit our gold category.
Full disclsoure: Tom Lydon’s clients own shares of GLD.