Gold prices dipped 1% to their lowest levels in nearly two months on Tuesday as the U.S. dollar soared ahead of economic data and comments from Federal Reserve officials that could shed light on the interest-rate path under the Trump administration.
Spot gold slipped 1% to $2,594.55 per ounce by 0940 GMT, after hitting its lowest since Sept. 20 at $2,590. U.S. gold futures fell 0.7% to $2,560.50.
“Dollar strength is weighing heavily on gold. Interestingly, the relationship seems to have dissipated for much of the year, but now it’s back in force ever since the election,” independent analyst Ross Norman said.
The dollar index rose to a four-month high, making the bullion more expensive.
The dollar is expected to benefit from some of Republican President-elect Donald Trump’s policies that will likely keep U.S. interest rates relatively higher for longer, an environment negative for non-yielding gold.
“The bigger issue for gold is competing assets and I think equity markets have performed extremely strongly post the election and you’re likely to see money flowing out into those competing markets,” Norman said.
Wall Street’s main indexes notched record high closes on Monday, lifted by stocks expected to benefit from Trump’s potential fiscal policies.
Bitcoin also extended its record rally, while short-dated U.S. Treasury yields jumped to a fresh 3-1/2-month high.
Market focus has now shifted to the October consumer price index data on Wednesday, the producer price index and weekly jobless claims on Thursday, and retail sales data on Friday.
Several central bank officials are also scheduled to speak this week, including Fed Chair Jerome Powell.
“At current levels we should start to see a pickup in physical demand, so expecting gold to bottom out in the $2,500-2,600/oz range,” said UBS analyst Giovanni Staunovo.
Spot silver dipped 1.3% at $30.28, platinum lost 1.3% to $952.55 and palladium fell 1.7% at $964.25.
By Rahul Paswan on Gold drops 1% to two-month low as US dollar marches higher | Reuters
