Gold price consolidates above $1,130/oz but headwinds remain

The gold price inched higher on the morning of Wednesday December 21 in London, finding some support from a slight easing in the dollar.

The dollar index was recently at 103.19, down 0.8%, although it remains near recent 14-year highs.

Spot gold was recently indicated at $1,134.15/1,134.24 per oz, up $2.30 on Tuesday’s close. The metal has come under pressure since the US Federal Reserve announced it would raise interest rates this month. Still, analysts said that, even with gold at these lower levels, it has yet to attract any significant bargain hunting.

A stronger dollar, higher bond yields and rises in US interest rates may mean bullion continues to lose its allure in the first months on 2017, Kash Kamal, an analyst at Sucden, said.

“The extent of the yellow metal’s decline is reliant on the route the Fed takes. Chair Janet Yellen in her most recent meeting has indicated the she may increase rates three times next year. We expect bullion will continue its downtrend, however; after this year we remain wary of Fed promises to increase interest rates,” he added.

In data today, EU consumer confidence and US existing home sales are of note.

In the other precious metals, the spot silver price at $16.015/16.035 per oz was unchanged. Spot platinum at $914/919 per oz was also unchanged while spot palladium nudged $1 higher to $661/666 per oz.

(Editing by Mark Shaw)