Gold prices sank deeper on Wednesday after upbeat U.S. data supported the expectations that the Federal Reserve will raise interest rates next week. We should note that a rate hike would weigh on gold, as it would raise the opportunity cost of holding bullion, which yields no interest. Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong said that investors are waiting for the Federal Reserve meeting next week and are in the meantime liquidating their bullions, forecasting choppy trade going into the year-end holidays. Gold futures were last seen trading flat at $1170.15 as of 8:10 GMT.
German industrial production rose less than expected in the past month according to data released early this morning. This is considered a sign that Europe’s biggest economy might not be growing as vehemently as once thought. The data indicated that overall, industrial production had a subdued start to the fourth quarter. Specifically, Industrial output edged up by 0.3 percent on the month according to data from the Economy Ministry but manufacturing production was almost flat, edging up only 0.1 percent, while the energy output fell 0.5 percent.
European markets opened higher today as investors speculate that the European Central Bank will decide to extend its monthly bond purchases to stoke growth in the region, in a meeting due later within the day. On today’s economic calendar we can also expect the release of the German and British industrial output figures of October, while in the U.K., Halifax is also publishing its November house price index.
In today’s European markets, Germany’s DAX added 1.1 percent at the open, U.K.’s FTSE advanced 0.6 percent, France’s CAC 40 climbed 0.9 percent while the Euro Stoxx 50 was last seen trading 0.9 percent higher as of 8:10 GMT.