BULLION LATEST 23/10: Gold price drops to two-week low on dollar rally

Spot gold prices fell during Asian morning trading on Monday October 23 as the dollar climbed its highest level in more than two weeks.

The spot gold price was quoted at $1,276.50-1,276.85 per oz as of 06:42 BST, down $3.37 from the previous session’s close. Trade has ranged from $1,273.75-1,278.25 so far today.

  • The dollar index continues to climb, supported by a rise in US Treasury yields and progress in tax reforms.
  • The index reached a high of 93.83 earlier in the session, its highest since October 6, 2017.
  • US president Donald Trump’s tax reform plans won partial support on Friday when Republican Senator Rand Paul said he was “all in” for massive tax cuts, but the party was still far from united over how to achieve the main item on its domestic agenda.
  • The top US Senate Republican and White House budget director said on Sunday they hoped for action on a Republican tax reform package by the end of the year, while keeping their options open on how to pay for sweeping tax cuts.
  • Higher US interest rates tend to boost the dollar and push bond yields up, putting pressure on the dollar-denominated, non-yielding gold.
  • “With the US 10-year [treasuries] marching towards 2.40%, we can expect golds appeal as an investment asset to continue to diminish in the short term implying more downside pain is possible for the yellow metal,” Jeffrey Halley, senior market analyst at Oanda, noted.

Silver, PGMs

  • In the other precious metals, the spot silver price gained $0.015 to $16.980-17.000 per oz. Platinum rose $1.00 to $918-923 per oz while palladium dipped $1.0 to $971-976 per oz.
  • On the Shanghai Futures Exchange, gold for December delivery was recently at 275.05 yuan ($41.48) per gram, and the December silver was at 3,880 yuan per kg.

Currency moves and data releases

  • The dollar index was recently up 0.07% at 93.73.
  • In other commodities, December Brent crude futures climbed 0.28% to $57.91 per barrel as the Organization of the Petroleum Exporting Countries and its allies reiterated that all options are open to re-balance oil markets.
  • Staying with the USA, oil drillers reduced the rig count a third week to the lowest since June, according to official figures released by Baker Hughes.
  • In equities, the benchmark Shanghai Composite Index rose 0.11%, or 3.63 points, to 3,382.28 and the Shenzhen Composite Index, which tracks stocks on China’s second exchange, edged down 0.02%, or 0.39 points, to 1,999.29.
  • In data on Friday, German PPI came in at 0.3% for September, up from 0.2% the previous month and the EU current account recorded a surplus of €33.3 billion, up from €25.1 billion previously. In US data, existing home sales were up in September at 5.39 million, compared with 5.35 million previously.
  • The economic agenda is light today with the German Bundesbank monthly report, UK CBI industrial order expectations and EU consumer confidence of note.