BULLION LATEST 16/11: Gold slips as dollar inches higher amid US rate hike expectations

Gold prices dipped during Asian morning trading on Thursday November 16 as the dollar gained ground amid the increased likelihood of a rise in US interest rates in December.

The spot gold price was quoted at $1,278.4-1,278.7 per oz as of 03:29am London time, down by $0.80 compared with the previous session’s close. Trade has ranged from $1,277.65-1,279.6 so far in the day.

  • Market expectations that the US Federal Reserve (the Fed) will raise US interest rates in December picked up on the back of some positive US data released on Wednesday.
  • The news also lent support to the dollar, putting pressure on the yellow metal.
  • The dollar index was up by 0.04% at 93.88 as of 03:30am London time.
  • “The rise in the [consumer price index] (CPI) in the [United States], combined with an unexpected rise in retail sales, saw investors increase their expectations of a rate hike in December by the Fed,” ANZ Research said.
  • “The market now expects a 100% chance of a December rate hike, though it still under prices the Fed in 2018 where it expects only 1.6 rate hikes compared to the Fed’s dot points of three,” National Australia Bank noted.
  • “Economic data certainly does not support the risk-off tone with US CPI and retail sales coming in in line with expectations,” the bank added.

Silver, PGMs

  • In the other precious metals, the spot silver price was up by $0.01 to $16,985-17.005 per oz. Platinum rose $2 to $929-934 per oz and palladium gained $2 to $983-988 per oz.
  • On the Shanghai Futures Exchange, gold for June delivery was at 279.3 yuan ($42.14) per gram, and the December silver was at 3,870 yuan per kg.

Currency moves and data releases

  • The dollar index was up by 0.04% at 93.88 as of 11:30am Shanghai time. This compares with a reading of 93.82 at roughly the same time on Wednesday.
  • In other commodities, the Brent crude oil spot price rose by 0.16% to $61.92 per barrel while the Texas light sweet crude oil spot price was up by 0.11% to $55.33 per barrel.
  • In equities, the Shanghai Composite was down 0.01% to 3,402.23
  • In US data on Wednesday, the October CPI was in line with expectations at 0.1%, but down from the previous reading of 0.5%. Retail sales surprised to the upside with a 0.2% gain compared with an expected reading of 0.0%, though this was down from the previous month’s upwardly revised 1.9% increase. The Empire State Manufacturing Index came in at 19.4 for November, lower than the expected and previous readings of 25.5 and 30.2, respectively.
  • The economic agenda is busy today with CPI data from the European Union and host of data from the US that includes unemployment claims, import prices, the Philly Fed Manufacturing Index, capacity utilization rate, industrial production and the National Association of Home Builders’ housing market index.
  • In addition, US Federal Open Market Committee Members Robert Kaplan and Lael Brainard are speaking.