Gold slips below $1,160/oz as strong US dollar weighs

The spot gold price slipped below $1,160 per oz during Asian trading hours on Monday December 12 as the US dollar strengthened further.

The US dollar index reached 101.79 on Monday, the highest since November 30. It was recently at 101.56, down 0.01% from last Friday’s close.

Gold could come under renewed downside pressure to below $1,100 in 2017 as the market is likely to trend towards a stronger US dollar in the coming months, Commerzbank said in a report late last Friday.

The recent spate of strong US macroeconomic data and positive sentiment following Donald Trump’s unexpected win in the US presidential elections had prompted profit-taking in gold since November.

Investors will now shift their focus to the US Federal Open Market Committee’s meeting on December 13-14. About 95% of market participants expect a rate increase during the meeting, according to the CME FedWatch Tool.

In other commodities, the Brent crude oil spot price reached as high as $56.83 per barrel on Monday, the highest since July 2015 after some non-OPEC oil producing countries reached a production cut agreement. The price was recently at $56.61 on Monday, up 4.27% from last Friday’s close.

“The non-OPEC production cut agreement reached over the weekend should keep oil prices well bid this week. This positive sentiment will likely extend into other commodity markets as well,” ANZ research said on Monday morning.

Saudi Arabia has signalled that it would cut oil production by even more than what was agreed with its OPEC counterparts last month while eleven non-OPEC countries including Russia and Mexico agreed to cut production by 558,000 barrels per day.

“While the risk remains that adherence to the various production cuts may not be 100%, it sends a strong signal to the market. This should accelerate inventory declines despite the potential for recently curtailed US shale oil output to be reactivated,” the bank said.

In currencies, the US dollar index is so far down 0.04% at 101.52 on Monday.

In equities, the Shanghai Composite slipped 1.03% to 3,199.42 so far today.

In the other precious metals, the spot silver price increased $0.025 to $16.87/16.89 per oz. Platinum at $912/922 per oz was up $7, while palladium rose $8 to $732/738 per oz.

On the Shanghai Futures Exchange, gold for June delivery was recently at 267.90 yuan ($39) per gram, and the June silver was at 4,244 yuan per kg.

(Editing by Kyle Docherty)

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