Gold prices have dropped reflecting the increase in the overall risk appetite and increasing the likelihood of further tightening of monetary policy by the Fed at the end of the year. Pressure on the precious metal also was a strengthening of the US dollar against the background of positive data.
Data provided by Markit Economics, signaled a further recovery of business conditions across the US manufacturing sector, led by sustained expansion of incoming new orders and the very rapid growth in production. Creation of new jobs had accelerated, and was the most rapid in the last 12 months. Meanwhile, the purchase prices rose at the fastest pace since November 2014, but selling prices rose only slightly. Overall, the preliminary manufacturing PMI index rose to 52.9 in July compared with 51.3 in June. It was predicted that the indicator will improve only to 51.6 points. Analysts say the recent data from US increases the likelihood of the Fed raising interest rates. This is unlikely to happen at the July meeting, but closer to the end of the year. Futures on the federal funds currently estimated the probability of a 20% rate hike in September. Meanwhile, the chances for a increase in December is 40% compared with less than 20% a week ago, and 9% at the beginning of the month. Higher rates hurt gold prices, which does not bring guaranteed income and become less in demand relative to higher-yielding assets.
BNP Paribas experts reviewed in the forecast for gold for 2016 and 2017. Now they expect the average gold price of $ 1245 in 2016 (previously $ 960) and $ 1,195 in 2017 (previous forecast $ 860).
Gold reserves in the largest gold ETF-fund SPDR Gold Trust fell yesterday to 0.22 percent, reaching the level of 963.14 tons.
The cost of the August gold futures on the COMEX fell to $ 1320.20 per ounce.
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