Gold hits 5-month low on strong dol­lar

Kuwait Times - - BUSINESS -

Gold edged lower yes­ter­day, hov­er­ing just above an ear­lier five-month low, as the dol­lar and Trea­sury yields strength­ened on ex­pec­ta­tions that Pres­i­dent-elect Don­ald Trump will boost US spend­ing. “Gold is suf­fer­ing from an ir­ra­tional dol­lar rally on ex­pec­ta­tions Trump’s fis­cal poli­cies will boost spend­ing and there­fore in­fla­tion, which could lead to higher US in­ter­est rates,” said Ac­tivTrades chief an­a­lyst Carlo Al­berto de Casa.

“How­ever, uncer­tainty about the US eco­nomic outlook and also about in­ter­na­tional risk events such as the Aus­trian pres­i­den­tial elec­tion and the Ital­ian con­sti­tu­tional ref­er­en­dum next month could have an im­pact on wider mar­kets and im­pact gold’s trad­ing in the medium term.”

Spot gold was down 0.2 per­cent at $1,223.51 an ounce by 1231 GMT. The metal fell 1 per­cent to $1,212.26 an ounce ear­lier in the ses­sion, its low­est since June 3. US gold fu­tures were down 0.1 per­cent at $1,222.20 an ounce. The dol­lar rose to an 11-month high against a bas­ket of ma­jor peers, while yields on the US 10-year Trea­sury notes climbed to their high­est since Jan­uary at 2.2 per­cent. A broad sell­off in global com­modi­ties and surg­ing bond yields had seen the metal dip­ping nearly 3 per­cent in the pre­vi­ous ses­sion. “Peo­ple seem to have un­wound their Trump-risk and are now talk­ing more about ‘Trumpfla­tion’,” said Jef­frey Hal­ley, se­nior mar­ket an­a­lyst at OANDA. “The rate hike in De­cem­ber is an ab­so­lute done deal now.” The mar­ket is now bet­ting on the Fed­eral Re­serve rais­ing in­ter­est rates more quickly. Higher US in­ter­est rates could lift the op­por­tu­nity cost of hold­ing non-in­ter­est-bear­ing gold. — Reuters

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