Tatler-Cox: Gold Plunges On Rate Hike Jitters

Tatler-Cox: Gold prices fell sharply to below the psychological $1300 level this week on renewed Fed rate hike rhetoric.
Tatler Cox: The price of gold suffered its biggest one day fall in almost 3 years following the release of US economic data that appeared to support the narrative that the world's largest economy was growing fast enough to justify at least one increase in interest rates by the end of the year.
Spot gold fell by 3% in Tuesday's session to just over $1271.00 per troy ounce, a level not seen since before the United Kingdom voted to leave the European Union on June 26th. Despite attempting to stage a rally the following day, a slew of additional data saw the yellow metal pare gains made during the Asian and European sessions taking prices below $1270.00.
Gold is sensitive to strength in the US dollar and signs the US Federal Reserve may raise interest rates, reducing gold's appeal as an alternative asset.
"This kind of price action will make a few investors pause for consideration but we remain very confident in gold," said Shinjei Ako, head of commodities research at Tatler-Cox.
"We're very much at the end of this particular economic cycle and there are definitive signs that growth will slow in the US. We don't think the Fed can raise interest rates much beyond a token 25 basis points in December. Much of gold's meteoric rise since December came after the last rate hike and you'd be hard pressed to find anyone who genuinely believes that the central bank can raise interest rates 3 or 4 times in 2017 so we're advising clients to take this opportunity to add to their gold holdings."
Tatler-Cox says it will maintain its $1400 price target on gold by year end.