Gold Rises in Spite of Strong Dollar

Gold Rises in Spite of Strong Dollar

Gold Rises in Spite of Strong Dollar

The U.S. Dollar recently became stronger but the fact worth noticing is that gold has also maintained its steady pace towards the top.

The spot gold price was recently quoted at $1,268.10/1,268.50 per oz, which had an increase of $4 on the previous close. There was also a narrow increase in the trade quotient. The market experts are expecting around 70% of a rate rise in December and broad support at $1,250-1,260 per oz. It is however, difficult to see gold pulling too far away from these levels over the short term.

The chances of Fed rate rise have risen due to stronger US PMI data. This made the Dollar rise but it could not affect the prices of gold for the time being.

St Louis Fed president James Bullard also put forward his opinion that The Fed is most likely to change the interest rates in the coming December although low interest rates are expected to remain for the next two or three years. Market players are also looking ahead to a more U.S. economic data after getting the clues about the December rate hike.

The economists are anticipated to go through the U.S. consumer confidence data so as to analyze if the world's largest economy is sturdy enough to withstand an increase in borrowing costs before the end of the year. Keeping this in mind, the traders are pricing in around a 74% chance of a rate hike at the Fed's December meeting.

A stronger U.S. dollar generally overshadows the gold, as it diminishes the metal's appeal as an alternative asset and makes the dollar-priced commodities more expensive.

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