Gold hits 3-week low; Fed rate hike outlook weighs

The average is on a six-day streak of new highs.

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Financial shares added to gains following the statement, with the S&P 500 bank index ending up 0.7 percent, while utilities declined 0.8 percent. The kiwi may test support near 0.72 against the greenback and 1.66 against the euro.

Banks, insurers and other financial companies led the gainers.

The market is so sure in its expectations for tomorrow’s Fed announcement that all three major indexes closed at new highs today.

The New Zealand dollar gave up earlier gains after the US Federal Reserve announced a plan to start shrinking its balance sheet and signalled one more rate hike later this year, remaining rangebound ahead of Saturday’s general election. The Fed said it would begin shedding $4.5 trillion in investments next month.

USA economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, the monthly house price index, and leading economic indicators. A separate report on business confidence showed optimism among chief executive officers reached its highest level since early 2014.

“The market reaction is interpreting the Fed as slightly hawkish but not too much”, said Victor Jones, director of trading at TD Ameritrade in Chicago. But traders will be listening for any indications the central bank could move sooner.

CENTRAL BANK WATCH: In Europe, investors are monitoring a speech by Bank of England Governor Mark Carney for confirmation that the bank expects to raise interest rates in coming months for the first time in a decade. That’s most important factor for as long as it persists. Oil prices were headed higher. Benchmark 10-year notes fell 11/32 in price to yield 2.29 percent, up from 2.24 percent before the Fed’s statement and the highest level since August 8. The move will gradually increase long-term borrowing rates. Banks benefit from higher rates, which can translate into higher profits from lending money.

The prospect of another Fed rate increase this year – at a time when the US economy is growing modestly and may slow somewhat from the impact of hurricanes Harvey and Irma – could be bad news for stocks the next few weeks, Chalupnik said. Wells Fargo & Co. rose 65 cents, or 1.2 percent, to $53.36.

As of 1:30 p.m. EST, gold was trading at $1,307.18 per ounce, up 0.2 percent from a low of $1,304.10 touched the previous day.

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Crude oil futures fell Tuesday, bouncing back and forth near $50 a barrel before finally turning lower at session’s end.

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