Gold under pressure as US dollar surges

The spot gold price came under further pressure during Asian trading hours on Monday November 14 as the US dollar surged.

The spot gold price was recently quoted at $1,2519.10/1,219.50 per oz, down $8.70 on the previous close. Trade has ranged from $1,213.80 to $1,230.30 so far.

Precious metals came under pressure since last Friday as the US dollar index rally remained relentless, trading above the 99 level resistance, Commerzbank said late last Friday.

With gold closing below the important $1,242 support level, short- and mid-term downside trend pressure is likely into the year-end, the bank said.

The US dollar index surged as high as 99.68 on Monday, which was the highest since January 29 2016. The index was recently at 99.40, up 0.4%, buoyed by expectations of larger fiscal spending and higher inflation when president-elect Donald Trump takes office next year.

The greenback was also helped by Federal Reserve vice-chairman Stanley Fischer’s comments last Friday that the Fed was getting closer to raising interest rates again as it appeared reasonably close to achieving both its inflation and its employment goal, Credit Suisse noted in a report on Monday.

“Donald Trump’s proposed policies are causing turmoil in emerging markets and higher inflation could prompt the Federal Reserve to accelerate the pace of rate hikes,” Credit Suisse added.

In Chinese data, China’s October industrial production and January-October fixed asset investment released on Monday were more or less in line with expectations.

Chinese industrial production rose 6.1% year-on-year in October, close to expectations of 6.2% and at the same rate of growth as in September.

Chinese fixed asset investment increased 8.3% year-on-year in January-October, also close to forecast of 8.2% and September’s reading of 8.2%.

Chinese retail sales, however, grew 10.0% year-on-year in October, below consensus of 10.7% and September’s reading of also 10.7%.

In US data, preliminary University of Michigan consumer sentiment in November came in at 91.6 last Friday, above the forecast of 87.4. Inflation expectations over that same period also exceeded economic consensus with a 2.7% increase, besting the previous reading of 2.4%.

In other commodities, the Brent crude oil spot price rose 0.55% to $44.78 per barrel, and the Texas light sweet crude oil spot price increased 0.7% to $43.39 so far on Monday.

In equities, the Shanghai Composite rose 0.26% to 3,204.42 recently on Monday.

In the other precious metals, the spot silver price fell $0.070 to $17.265/17.285 per oz. Platinum at $939/944 per oz was up $4 while palladium increased $1.50 to $671/676 per oz.

On the Shanghai Futures Exchange, gold for June delivery was last unchanged at 272.25 yuan ($39.78) per gram, and the December silver was flat at 4,019 yuan per kilogram.

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