Gold intermarket: Renewed rate hike expectations weigh on the metal

Gold fell sharply on Wednesday and hit fresh monthly lows during the New York session as sentiment improved and expectations for a Federal Reserve interest rate hike later this year resurfaced.

The yellow metal slumped to its lowest level since June 30, bottoming out at $1,313.54 an ounce, before recovering modestly. It was last trading at $1,318 an ounce, recording a 1.03% daily loss.

A string of solid US data, ranging from housing starts to nonfarm payrolls, lifted expectations of a Fed’s rate hike after the Brexit vote made the picture not that clear.

Markets are currently pricing a 47% chance of a rate hike by December, compared with around 20% last week and 9% at the beginning of the month.

The US dollar, measured by the DXY, rose to above 97.00 on Wednesday, while USD/JPY reached its highest level since June 24 at 106.80.