14 September, 2016

Gold fell for a fifth straight day on Tuesday and there was modest weakness in the rest of the precious group as well. In fact, the session was very much like what we saw on Friday, where an equity selloff triggered a broad-based decline across a number of commodity markets. In this regard, the Dow lost almost 260 points, mostly on oil-related weakness and wiping out all of Monday’s advance. However, there has been no significant change in the rate probability going into Tuesday’s session. The current odds for a September increase remains at 15%, while the odds for a late-year move has stayed at 60%. Nevertheless, investors remain nervous, as there always is the possibility of a Fed surprise. Moreover, should a September rate increase not happen, subsequent increases-- perhaps even prior to December -- could still be in the cards.