Gold inches higher but strong dollar, rate hike expectations weigh

The spot gold price inched higher during Asian trading hours on Wednesday November 16 as the US dollar softened during the day, though pressure is still seen from the strong US dollar and US rate hike expectations in December.

The spot gold price was recently quoted at $1,232.30/1,232.60 per oz, up $5.50 on the previous close. Trade has ranged from $1,226.83 to $1,233.10 so far.

“It is hard to be optimistic for the spot gold price in the short-term as the US dollar continues to strengthen, positive US economic data and Fed speakers support a rate hike and gold ETFs pare their holdings,” China’s Zhengjin Precious Metals said on Wednesday morning.

The broker sees near-term support for the spot gold price at $1,200 per oz and resistance at $1,250.

The US dollar index had surged to 100.26 on Tuesday, the highest since December 3, 2015. The index was recently at 99.91, down 0.26% from the previous day’s close.

In data, key economic figures released from the US on Tuesday were better than expected – core retail sales came in at 0.8%, retail sales at 0.8%, the Empire State manufacturing index at 1.5 and import prices at 0.5%.

Since Donald Trump’s victory in the US presidential election, market expectations are for the president-elect to boost infrastructure spending and hence inflation, which will in turn satisfy a requirement the Feds need – other than a strong labour market – to normalise its monetary policy.

Market participants currently see a 91% chance of a rate hike in December, up from 86% the previous day, according to CME FedWatch Tool.

US data due later today includes PPI, core PPI, capacity utilisation rate, industrial production, NAHB housing market index and crude oil inventories.

In equities, the Shanghai Composite fell 0.16% to 3,201.74 recently on Wednesday.

In other commodities, the Brent crude oil spot price eased 0.54% to $46.66 per barrel, and the Texas light sweet crude oil spot price slipped 0.5% to $45.46 so far on Wednesday.

In the other precious metals, the spot silver price rose $0.145 to $17.195/17.215 per oz. Platinum at $938/948 per oz was up $2 while palladium increased $2 to $706/711 per oz.

On the Shanghai Futures Exchange, gold for June delivery was recently at 277.35 yuan ($40) per gram, and the June silver was at 4,172 yuan per kilogram.

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