Gold intermarket: Vulnerable with focus on Fed

Gold fell on Monday, pressured by a better risk sentiment in financial markets. The metal hit a low near $1,312 an ounce but managed to trim losses afterwards.

Meanwhile, the greenback has been supported by renewed hopes the Federal Reserve could rise rates one more time before the year ends amid supportive US data. 

Focus remains on Fed’s meeting on Wednesday, although no policy adjustments are expected at this meeting, attention will be on the statement for hints on the timing of next hike.  Interest rate futures are currently pricing in a 49% chance of a rate hike  in December, against 20% a week ago and up from 9% earlier this month. 

Gold remains very sensitive to rate hike expectations, as they tend to lift the greenback and weigh on dollar-priced metals. Meanwhile, in an environment of low interest rates investors are less attracted to bonds (and the greenback), lifting appeal for no-yielding gold.