Gold prices fell by more than 2% on Monday. The reason is the rising value of the dollar and the wider consequences of Donald Trump’s victory in the US presidential elections on fiscal policy and the development of interest rates. Reuters reported about it.
The spot price of gold reached USD 2,666.48 (EUR 2,503.50) per troy ounce (31.1 grams) by 5:11 p.m. CET. This means a decrease of 2.3%. The spot price of silver also recorded a decrease. It was also down 2.3% to $30.58/ounce.
The worst week in more than five months
The dollar index, which tracks the greenback’s performance against a basket of six major world currencies, rose 0.5% on Monday to its highest since early July. It rose 1.5% last week after Trump’s victory in the US presidential election was announced.
Just after Donald Trump’s victory, gold prices recorded their worst week in more than five months. His victory also represents new uncertainty for the central bank after it started cutting interest rates in September. After a reduction of 50 basis points in September, the bank lowered the main interest rate last week by another 25 basis points to a range of 4.50 to 4.75%.
Markets now expect the Fed to cut further by 25 basis points in December, but have reduced the likelihood of such a move. Originally, the probability of a rate cut was set at 80%, but after Trump’s victory, it was lowered to 65%.
In addition, the statements of several representatives of the Fed, including the president of the bank, Jerome Powell, are awaited. In addition to their statements, the markets during this week also expect data on inflation and producer prices in the US, further on the number of applications for unemployment benefits, as well as on retail sales.
Cheaper oil
Oil prices fell about 3% on Monday, with Brent falling below $72 a barrel (159 liters). Developments in the markets were mainly influenced by weaker than expected incentives from Beijing to support the economy and the strengthening of the dollar to a four-month high. TASR informs about it based on a Reuters report and Bloomberg data.
Last week, China announced new measures to support the economy, which include easing pressure on regional governments to repay debts. However, according to the markets, the latest measures are insufficient to significantly boost economic growth, as they do not include any direct support to increase consumption. This means that a sharper growth in oil demand from the world’s second largest economy is not expected.
In addition, the dollar index, which tracks the dollar’s performance against a basket of six major world currencies, rose to 105.5 points on Monday. This is the highest value since July.
The price of Brent North Sea oil mixture for delivery in January reached USD 71.83 (EUR 67.44) per barrel by 17:38 CET. Compared to the previous close, this means a decrease of USD 2.04 (2.76%).
The price of American WTI light oil with the January contract reached USD 68.19/barrel. This represents a decrease of $2.19, or 3.11%, from the previous close.
