Gold has lost its shine in the worldwide bullion market on Thursday after the Federal Reserve hiked interest rates for the first time since 2006. The yellow metal was the cynosure of investors during the financial crisis.
Already Lost 10%
In 2011, the precious metal crossed $1800 per ounce mark with the threat of breaching $2,000 per ounce mark in the following year. The financial crisis shifted the investors’ money from equity and bond markets to bullion and commodities market, especially the oil, gold and silver. Gold has also delivered a long streak of growth for over ten years till a couple of years back.
In the current year, Gold has already witnessed close to 10% drop mainly due to the uncertainty clouded over the timing of the interest rate hike. There were also fears that increased interest rates would further hit demand since the consumers need to pay for keeping the yellow metal in a safe box rather than earning interest for the invested money. As a result, Gold is trading close to the six-year low.
Spot Gold Dipped
Following the interest rate hike in the United States, Singapore market witnessed 60 basis points fall in the yellow metal price to about $1,066 per ounce level at about 06.09 GMT. It further slipped to approximately 1,064.5. That came on the back of a one percent drop in the America on Wednesday. A Hong Kong dealer said that the market was more focused towards dollar rather than the precious metal.
The bullion market also expects the Federal Reserve to hike interest rates 75 basis points before the end of the next year. That would ultimately drag down the Gold price to below $1,000 an ounce level. On a local currency basis, it would be tough to predict a drop in gold price since the dollar will get strengthened.
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