13th December 2017

 Gold finished more or less flat on Tuesday, but not before retreating to a five-month low of $1238/ounce at one point during the session. Investors are skittish about the Federal Reserve meeting on Wednesday. In this regard, although a rate hike is unanimously discounted by now, investors are concerned about Fed policy going into 2018. Bond markets expect two further rate hikes next year, the Fed is implying three, while JP Morgan said late week that up to four hikes cannot be ruled out. Despite a ramped-up rate trajectory, a Reuters poll published last week expects the dollar to remain on the defensive in the coming months, a view we would agree with. In addition to the Fed meeting, the ECB and the Bank of England also meet this week and it is quite possible that these two central banks will signal a tightening bias going forward as well, so all in all, this is not a favorable backdrop for the precious metal.