Gold Slips as Stronger Dollar Weighs on Demand
December 2, 2015 (Source: WSJ) — Gold prices were slightly lower on the London spot market Wednesday, as the strengthening dollar continued to weigh on demand for the precious metal.
Spot gold was down 0.1% at $1,067.82 a troy ounce in morning European trade, sticking to a narrow $4 range between $1,067.19 and $1,071.53 an ounce.
The dollar weakened Tuesday, which helped push gold to a three-day high at $1,074.71 an ounce.
This week, investors will focus on the release of U.S. non-farm payroll data on Friday. Every piece of U.S. economic data is parsed to see if it could influence whether the U.S. Federal Reserve will go ahead with a interest rate increase this month. A rate rise would likely strengthen the dollar.
“Market participants are clearly convinced that the U.S. Federal Reserve will raise interest rates on Dec. 14, regardless of the data situation,” said Commerzbank AG . “This is doubtless putting pressure on the price.”
The WSJ Dollar Index was recently up 0.13% at 90.57. Gold is a dollar-denominated commodity, making the metal more expensive to buy when the U.S. currency gains.
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Meanwhile, expectations that the European Central Bank will loosen its monetary policy at its December meeting, which could weaken the euro and strengthen the dollar, is another anticipated event this week.
Prices are likely to remain rangebound as “most players seem to be happy to remain on the sidelines until the FOMC meeting in two weeks’ time,” said David Govett, head of precious metals at Marex Spectron, in a note.
Among the other precious metals, spot silver was down 0.2% at $14.149 an ounce, spot platinum was up 0.4% at $841.92 an ounce and spot palladium was down 0.2% at $538 an ounce.
Raj Shah has professional experience working for over a half a dozen years at financial firms such as Merrill Lynch and First Allied Securities Inc., ... <Read more about Raj Shah>