Gold eases off 9-1/2 month lows as dollar rally pauses

By Investing.com / November 24, 2016 / in.investing.com / Article Link

Investing.com - Gold prices eased on Thursday after falling to their lowest levels since February as the dollar paused after surging to fresh 14-year peaks.

Gold for December delivery was trading at $1,187.55 a troy ounce by 0946 GMT, after earlier falling as low as $1,179.75, a level not seen since February 8.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was last at 101.67, not far from highs of 102.11, the strongest level since early April 2003.

The dollar rallied after upbeat U.S. data and Wednesday's Federal Reserve minutes cemented expectations for a rate hike next month.

The minutes from the Fed's November meeting said an interest-rate increase was possible "relatively soon" if data indicated that the economy is improving.

Some Fed officials explicitly called for a rate hike in December, the minutes showed.

Separately, data showed that U.S. durable goods orders rose at the fastest rate in a year in October and another report showed that a gauge of U.S. consumer confidence rose strongly in November.

According to Investing.com's Fed Rate Monitor Tool, odds for a rate hike at the Fed's December 13-14 meeting are now at 100%.

Gold is priced in dollars and becomes more expensive to holders of other currencies when the dollar strengthens.

Prices of the yellow metal had already come under pressure this month amid the view that increased U.S. fiscal spending under a Trump administration will spur economic growth and inflation, which would ultimately lead to an era of higher interest rates.

Gold is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.

Trade was expected remain quiet on Thursday; with U.S. markets closed for the Thanksgiving Day holiday.

Elsewhere in metals trading, silver futures for December delivery were at $16.34 a troy ounce, while copper futures traded at $2.65 a pound.

Copper prices have risen around 20% so far this month on expectations of rising demand from China and an increase in infrastructure spending in the U.S. when Donald Trump becomes president.

China and the U.S. are the top two consumers of the industrial metal.

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