Gold eases as strong US data boosts dollar, odds for Dec rate hike

The spot gold price eased during Asian trading hours on Thursday November 24 after positive US economic data further boosted the US dollar and case for a US December rate hike.

The spot gold price was recently quoted at $1,185.95/1,186.35 per oz, down $3.40 on the previous close. Trade has ranged from $1,182.65 to $1,189.90 so far.

The yellow metal had fallen to as low as $1,181.90 per oz on Wednesday, the lowest since February 10 2016 after the release of positive US economic data.

The US dollar index reached as high as 101.91 on Wednesday, the highest since March 2003. It was recently at 101.86, up 0.13% from its previous close.

“It is difficult to be positive about the spot gold price in the short-term after positive US data boosted the US dollar index while there continues to be pressure from expectations of a US rate hike,” China’s Zhengjin Previous Metals said.

The broker sees short-term support for the spot gold price at $1,160 per oz and resistance at $1,200.

The US dollar gleaned strength from news that US durable goods orders rose much more strongly than forecasted – it was up 4.8% month-on-month versus an expected uptick of 1.7%.

“The report is the latest testament to the strength of the US economy and appears to cement the case for the US Federal Reserve to hike rates in December,” Credit Suisse said in a report on Thursday.

“We believe the US dollar will continue to show strength on the back of higher Treasury yields and US president-elect Donald Trump’s plans to boost fiscal spending.”

Market participants now see a 93.5% chance of US rate hike in December, according to the CME FedWatch Tool.

US data overnight had also showed revised UoM consumer sentiment at 93.8 – a reading that would have been based on survey responses received after news of Trump’s election victory.

“So being up on the 91.6 preliminary reading, it signifies either that US consumers collectively view Trump’s election as good news for them, or perhaps it just means that the removal of uncertainty about the election outcome has seen confidence pick-up. Either way it looks to be good news for personal consumption in the rest of the fourth quarter and into early 2017,” National Australia Bank said on Thursday morning.

In other US data, core durable goods at 1.0% beat the forecast of 0.2% while HPI was also better than expected at 0.6%. But unemployment claims disappointed at 251,000 – a reading of 241,000 had been expected.

US flash manufacturing PMI was in largely in line with expectations at 53.8, and revised UoM inflation was on target at 2.4%. But US crude oil inventories at -1.3 million barrels missed the forecast of 0.3 million barrels.

In central bank news, the US Federal Open Market Committee’s minutes from its November meeting had little surprises as expectations of a December 14 US rate hike remains intact in markets.

In other commodities, the Brent crude oil spot price increased 0.23% to $48.97 per barrel so far on Thursday.

In equities, the Shanghai Composite rose 0.16% to 3,246.20 recently on Thursday.

In the other precious metals, the spot silver price fell $0.07 to $16.25/16.29 per oz. Platinum at $919/924 per oz was down $7 while palladium was unchanged at $729/735 per oz.

On the Shanghai Futures Exchange, gold for June delivery was recently at 273.20 yuan ($39) per gram, and the June silver was at 4,135 yuan per kilogram.

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