Gold Price Falls to 9½-Month Low on Strong Dollar
Mumbai-India (Nov 24) Gold was trading at its lowest level in 9½ months on Thursday as the strong dollar and speculation about an Indian import ban continued to take the shine off the metal.
Gold was down 0.1% at $1.186.80 a troy ounce in volatile morning trade in London. It shed over 2% on Wednesday to close below $1,200 an ounce for the first time since February.
“For the short term, the precious complex will find it hard to recover with the dollar as strong as it is,” David Govett, head of precious metals at brokerage firm Marex Spectron, wrote in a research note.
Analysts at Commerzbank said additional selling pressure was generated by a rumor India’s government may ban gold imports as part of its anticorruption drive. India vies with China as the world’s top gold consumer.
Commerzbank noted that Wednesday was the 10th consecutive day of withdrawals of money from exchange-traded funds that buy gold.
With U.S. markets closing early for the Thanksgiving holiday, any price swings could be exaggerated.
“Liquidity will start to dry up from about midday onwards,” said Mr. Govett at Marex. ”Days like these can produce some silly moves, so I would refrain from attempting to take positions today.”
The dollar continued to strengthen on Thursday, having surged to a 14-year high in the previous session as minutes from the Federal Reserve’s November meeting and better-than-expected economic data reinforced the probability of a U.S. interest-rate rise next month.
The WSJ Dollar Index, which tracks the U.S. dollar against 16 other currencies, was recently up 0.07% at 91.94.
Fed fund futures, used to bet on central bank policy, imply a 93.5% probability of a rate-hike in December. Higher rates tend to weigh on gold, which doesn’t pay a return, while strong economic data saps demand for the precious metal as a haven.
Platinum was recently down 0.8% at $919.75 an ounce. Silver was up 0.4% at $16.37 an ounce. Palladium was up 0.9% at $739 an ounce.
Source: WSJ
