Gold checked by US dollar strength

Oct 11, 2016 - 4:14 AM GMT
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The spot gold price inched lower during Asian trading hours on Tuesday, October 11, amid a stronger US dollar.

Spot gold was last at $1,257.70-1,258.10 per ounce, down $1.70 from Monday’s close. Trading ranged at $1,255.55-1,260.23 so far on Tuesday.

The US dollar appears to be benefitting after the second US presidential debate between Donald Trump and Hillary Clinton on Monday and from the perception that a Clinton win in the US presidential election will open the way for a December US rate hike, National Australia Bank said on Tuesday morning.

The US dollar index rose 0.17 percent to 97.07 so far on Tuesday.

“With the US election less than a month away and a US rate rise also likely in the fourth quarter, the market has a lot to think about. We feel investors will continue to want safe-haven cover in the months ahead, so we expect this dip to be short-lived,” William Adams, head of research at FastMarkets, said.

On Monday, Fed Fund futures indicate a 70-percent chance of a 25-basis-point rise in December, up from odds of 65 percent on Friday, according to the CME FedWatch Group tool.

In other commodities, the Brent crude oil spot price rose to a year’s high of $53.71 per barrel and the Texas light sweet crude oil spot price hit a four-month high of $51.56 on Monday after Russia said it was prepared to join an OPEC supply deal after it is finalised in November.

“The [oil price] rally was purely sentiment-driven as the details of how this would actually work are still pretty thin on the ground, but given Russia is the biggest oil producer in the world any deal that gets them to cut back will be seen as a big positive for the oil market,” Angus Nicholson, a market analyst at IG, said.

The Brent spot price was last at $53.09, up 0.37 percent, and the WTI spot price was recently at $51.28, up 0.1 percent, on Tuesday.

In equities, the Shanghai Composite rose 0.42 percent to 3,061.00 recently on Tuesday.

It is a light day for economic data with mainly the German ZEW economic sentiment and EU ZEW economic sentiment, as well as the US NFIB small business index and labour market conditions index due later today.

In other precious metals, silver was last at $17.655/17.68, up $0.043. Platinum rose $4.50 to $963/968, and palladium increased $2 to $664/672 recently on Tuesday.

On the Shanghai Futures Exchange, gold for December delivery was last unchanged at 273.40 yuan per gram, and the December silver was flat at 3,986 yuan per kilogram.