Gold Prices Near 1-Week Lows as Dollar Edges Higher
Investing.com – Gold prices fell on Monday as a slump in the euro amid rising political uncertainty in Germany pushed the dollar to a nearly one-week high dampening demand for the precious metal.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange fell by $3.11, or 0.35%, to $1280.77 a troy ounce.
Chancellor Angela Merkel said on Monday that she would prefer new elections rather than lead a minority government after talks to form the country's next government collapsed overnight.
That sparked concerns over the future leadership position of chancellor Merkel, pressuring the euro to lows, while supporting an uptick in the dollar to trade higher against a basket of global currencies.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.31% to 93.90.
Also adding to gold weakness was the prospect of higher interest rates as the Federal Reserve’s December 12-13 meeting draws closer amid strong expectations the central bank will raise rates.
According to investing.com’s fed rate monitor tool 100% traders expect the Federal Reserve to raise rates.
Gold is sensitive to moves higher in both bond yields and the U.S. dollar – A stronger dollar makes gold more expensive for holders of foreign currency while a rise in U.S. rates, lift the opportunity cost of holding non-yielding assets such as bullion.
In other precious metal trade, silver futures rose 2.70% to $16.90 a troy ounce, while platinum futures lost 3.14% to $924.60.
Copper traded at $3.09, up 0.85% while natural gas fell by 1.07% to $3.06.
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