According to the Fed’s dot plot, the fed funds rate will be 2.125% be December 2018. This is about 40 bps higher than what the current Dec 18 fed funds futures contract is pricing in. If the Fed hits its target that could weigh on gold prices. In the chart below we plot gold prices against the December 18 implied interest rate for fed fund futures (we simply take 100 minus the value of the fed funds futures contract to get the implied rate). As you can see, there has been a very strong negative relationship between the two this year. As the expectations of higher interest rates have increased over the past several months, the price of gold has tumbled. If the market’s expectations have to catch-up to the fed’s expectations (the opposite has been true for the majority of this cycle), then gold prices may fall further.