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Forex

Gold is cheap amid a stronger dollar in anticipation of a U.S. Federal Reserve meeting

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why gold is getting cheaper

Gold prices fell Monday due to a strengthening dollar as investors braced for aggressive interest rate hikes by the U.S. Federal Reserve and other central bankers trying to tame rising inflation.

The spot price of gold fell 0.59% to $1,665.04 a troy ounce. The dollar index rose 0.3 percent, making the metal more expensive for holders of other currencies.

Why is gold getting cheaper? The Federal Open Market Committee will begin a two-day meeting on Sept. 20 and announce its rate decision Wednesday. The markets are fully priced in a 75 basis point rate hike. 

Most regulators meeting this week, from the Swiss central bank to the South African central bank, are expected to raise rates. As for the Bank of England, market participants are divided on the size of the move: some think there will be a 50 basis point increase, while others think it will be 75 basis points.

Earlier, we reported that South Korea considers options to combat won vs. dollar exchange rate volatility

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