Gold Drops 0.9% to $4,345.80 as Dollar Hits Two-Month High
Front-month gold futures fell 0.9% to $4,345.80 after the dollar index reached a two-month peak. Crude oil prices also declined on easing supply concerns.
Key points
- Gold futures fell 0.9% to $4,345.80, ending a three-session winning streak.
- The U.S. dollar index hit a two-month high, making gold more expensive for foreign buyers.
- Traders price an 88% chance of a December U.S. rate hike, pressuring precious metals.
Front-month Comex gold futures fell 0.9% to $4,345.80 per ounce on Monday. This move ended a three-session winning streak for the precious metal.
The decline coincided with a rise in the U.S. dollar index to a two-month high. Stronger dollar values make gold less affordable for international buyers.
Dollar strength pressures bullion prices
The dollar extended its gains after the Federal Reserve's recent rate hike. This lifted the greenback by more than 1% last week.
Analyst Jim Wyckoff of American Gold Exchange noted that tighter U.S. monetary policy concerns persist. These factors are working directly against precious metal prices.
Market pricing reflects high rate hike probability
Traders are pricing in an 88% chance of a U.S. rate hike in December. This data comes from the CME FedWatch Tool.
Pepperstone research head Chris Weston described the environment as tough for gold. Investors are likely to shy away from the metal until dynamics improve.
Oil prices fall alongside gold
Gold fell alongside crude oil prices as supply concerns eased. These concerns related to disruptions in Saudi pipeline flows by Houthi rebels.
MUFG analyst Soojin Kim stated that growing expectations of global rate hikes weigh on gold. Higher rates reduce the attractiveness of the non-yielding asset.
Front-month silver futures also dipped 1.1% to $65.825 per ounce. TradingView reported these moves as part of the broader market shift.
