Why Gold Prices Are Falling

Gold prices have been falling the last few days over speculation that the Federal Reserve will raise interest rates. Since gold does not pay its owners any interest or dividends, it tends to fall on rumors that interest rates will go up.

Gold fell on Monday as pressure from speculation over a potential increase in U.S. interest rates this month offset the metal’s safe-haven appeal amid widespread weakness across other assets.

Spot gold was down almost 0.3 percent at $1,324.15 an ounce by 1400 GMT, with U.S. gold futures losing 0.5 percent to $1,328.

A chorus of hawkish comments from Federal Reserve officials kept expectations alive for a September rate increase despite a recent spate of disappointing economic data.

Right now, the Federal Reserve cannot raise rates unless they want to crash the housing market and the entire U.S. economy. Smart gold investors are buying the dip.