Gold Continuing to Drop After Yellen Confirms Interest HikeBy Annie Reona | Thursday, July 16th, 2015
Today marked the sixth session in a row that gold fell. This further fall occurred after the Fed Chair Janet Yellen confirmed that there will likely be a hike in an interest rate later in the year. When combined with the US economic data which was even better than some experts had anticipated, the US dollar continued to do well compared to other currencies.
At just $1 141.9, the gold futures traded at the lowest they have been since November of 2014. Just a fed days earlier Gold dropped in price significantly after the Euro summit reached a satisfactory deal with Greece.
Yellen continued to express that the Federal Reserve is on track for the first time in almost 10 years as they attempt to lift borrowing costs. She also commented on the weakness of the US labor market but believed that 2015 will see a continued economic growth for the United States.
Because economic growth generally steers investors away from purchasing gold, bonds and other instruments that yield interest are favored. Gold and other precious metals only yield positive returns while there are price gains which causes this shift in interest.
The largest bullion-backed ETF is the SPDR Gold trust, which saw no changes in their assets. They remained at 709.07 tons on Wednesday, which is similar to the 701.9 tons from June 15, 2015. The assets from June 15, 2015 were the lowest they had seen in nearly 7 years.
In China, the physical demand for gold has increased slightly. This increase is expected to continue as China’s economic growth has been growing even faster than expected.Published in News & Analysis