The price of gold has just melted as rate rise expectations soared
It's been anything but mellow yellow in the last few months, but today the price of gold skidded lower as investors showed their nerves over a potential US rate rise in the next few weeks.
Yep – having hovered near a 15-month high just a few weeks ago, today gold fell 1.4 per cent to $1,233 in mid-afternoon trading, after decidedly encouraging figures from the US showed new home sales had surged to their highest since 2008.
The figures, published this afternoon, showed sales jumped 16.6 per cent in April, the biggest jump since 1992.
That in turn caused already fevered speculation over a potential rate rise at this month's meeting of the Federal Open Markets Committee to jump.
"Following the release of the Fed April minutes, which showed 'most' FOMC members wanting a June rate hike – conditional on the evolution of data – Presidents Bullard and Williams spoke last night confirming this stance; and seemed comfortable with two or three hikes this year," said Mihir Kapadia, chief executive of Sun Global Investments.
"It looks like the probability of a rate hike in the next couple months is dependent on the strength of the data coming out of the US – if the data doesn’t weaken, we may well see a hike before July.’’