Gold price under pressure while dollar continues to surge

Gold remained under pressure in London trading on the morning of Monday November 14 while the dollar continues to strengthen.

The spot gold price was recently quoted at $1,223.35/1,223.65 per oz, down $4.50 and around its lowest since the start of June. Trade has ranged from $1,212.80 to $1,230.30 so far.

Precious metals should continue to weaken until risk aversion re-emerges. The combination of a stronger dollar, higher US real interest rates and firmer risk appetite is producing a very damaging macro environment for the complex, especially gold and platinum, Metal Bulletin analyst Boris Mikanikrezai said.

Because we think the strength in equities induced by Donald Trumps victory in the US presidential election is likely to continue for longer, we would not be surprised by a strong sell-off across the board this week, he added.

The dollar index surged to its strongest since December last year at 100.05 this morning, buoyed by expectations of larger fiscal spending and higher inflation when Trump takes office next year.

The greenback was also helped by Federal Reserve vice chairman Stanley Fischers comments on Friday that the Fed is readying to raise interest rates again as it appeared reasonably close to achieving both its inflation and its employment goal, Credit Suisse noted on Monday.

Trumps proposed policies are causing turmoil in emerging markets and higher inflation could prompt the Federal Reserve to accelerate the pace of rate hikes, Credit Suisse added.

In the other precious metals, the spot silver price was recently quoted at $17.345/17.365 per oz, unchanged from the previous close and around its lowest in five months. Silver dropped more sharply than gold on Friday, shedding 6.6%, Commerzbank noted.