BULLION LATEST 25/09: Stronger dollar pushes gold price lower

The spot gold price fell during Asian morning trading hours on Monday September 25, as the dollar strengthened and a quiet weekend on the North Korean front saw a further deterioration in any risk-off sentiment.

The spot gold price was recently quoted at $1,292.15-1,292.45 per oz as of 03:58 BST, down $5.20 on the previous session’s close. Trade has ranged from $1,289.6-1,294.05 so far.

  • A firmer dollar in light of increasing expectations of another US rates rise this year has seen investors’ appetite for the yellow metal wane.
  • The dollar index was up 0.11% at 92.25 as of 03:58 BST. This compares with the multi-year low of 91.01 seen on September 8.
  • With the market increasingly expecting another US rates rise by year-end, this should continue to lend support to the dollar.
  • According to CME Group’s FedWatch tool, which tracks the odds of interest rates in future months, there is a 71.4% probability that the policy board will raise rates to between 1.25-1.5% in December.
  • Several FOMC members will give speeches this week and investors will be keeping a close eye for any hawkish language hinting towards the possibility of another interest rate increase this year.
  • “Gold opened lower in early Asian trading … as weekend uncertainty passed without incident. Merkel’s win in the German federal elections and a quiet news weekend on the North Korean front, saw the US dollar opening stronger and gold’s weekend safe-haven premium eroded from Friday,” Jeffrey Halley, senior market analyst at Oanda, said.
  • “The Asian session’s performance will now be dictated by whether most of the weekend risk hedges have already been unwound and geopolitical headlines,’ Halley added.

Silver, PGMs

  • In the other precious metals, the spot silver price dipped $0.047 to $16.895-16.940 per oz. Platinum rose $3 to $931-936 per oz and palladium gained $6 to $919-924 per oz.
  • On the Shanghai Futures Exchange, gold for December delivery was recently at 277.4 yuan ($42.05) per gram, and the December silver was at 3,859 yuan per kg.

Currency moves and data releases

  • The dollar index was up 0.11% at 92.25 as of 03:58 BST.
  • In other commodities, the Brent crude oil spot price rose 0.02% to $56.77 per barrel while the Texas light sweet crude oil spot price was down 0.18% to $50.54
  • In equities, the Shanghai Composite dipped 0.36% to 3,340.57.
  • In data on Friday, US flash manufacturing PMI came in at 53.0, above the forecast of 52.9. Flash services PMI stood at 55.1, below the economic consensus of 55.8.
  • In EU data, flash manufacturing PMI was recorded higher at 58.3 from 57.4 last month while flash services PMI was also higher at 55.6 from 54.7.
  • The economic agenda is light today with German Ifo business climate, the UK’s Financial Policy Committee statement and China’s CB leading index.
  • In addition, FOMC members William Dudley, Charles Evans and Neel Kashkari as well as European Central Bank president Mario Draghi are speaking.
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