Metals News
Gold Falls on U.S. Rate Hike Fear
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Mar 30,2011

CHICAGO, Mar. 30  -- Gold futures on the COMEX Division of the New York Mercantile Exchange fell for the fourth session in a row Tuesday amid rising concerns that a potential U.S. interest rate increase would hurt the precious metal.

The most active gold contract for June delivery dropped 3.8 dollars, or 0.3 percent, to 1,417.5 dollars per ounce.

Gold has showed some initial strength after a report released by Conference Board, a private research group this morning indicated that its U.S. consumer confidence index dropped to 63.4 this month, from a revised 72.0 in February.

A trader mentioned that it might take more than a couple of weak U.S. economic indicators to shift the market sentiment, as a series of upbeat economic data released recently boosted investors' expectations of firmer interest rate policies in the U.S.

Many analysts pointed out that the threat of a central bank raising their rates is bearish for precious metals at least initially, as higher interest rates raise the opportunity costs for holding gold and gold-backed investments.

Gold failed to hold on to its earlier gains and came back to negative territory before the closing, as buying interest remained subdued.

May silver dropped 10.1 cents, or 0.3 percent, to 36.987 dollars. July platinum lost 8 dollars, or 0.5 percent, to 1,744.1 dollars per ounce.


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