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Gold Hovers Around $1,200 As Dollars Surges to 17-Month High

November 12, 2018 at 18:26 by Andrew Moran

Gold futures are hovering just above the crucial $1,200 mark. Despite the massive selloff in US equities, the yellow metal is sliding on a soaring greenback, buoyed by expectations for a December rate hike. Will gold prices dip below the important threshold?

December gold futures tumbled $4.60, or 0.38%, to $1,204.00 per ounce at 16:35 GMT on Monday. Gold is trading at a one-month low. Last week, gold shed 3.6%, and prices are already down 2% on the month.

Silver, the sister commodity to gold, is on track to touch $14 this week as futures contracts are falling. December silver futures slid $0.115, or 0.81%, to $14.025 an ounce. The white metal recorded a 3.8% dip last week, and it is in the red by 5% so far this month.

Although the massive 400-point selloff in US equities should be sending a rally in the precious metal, it is the strengthening dollar that is causing gold’s descent. The US dollar surged 0.51% to 97.49, bringing the currency’s year-to-date gains to 6%. A strong buck is bad for dollar-denominated commodities because it makes it more expensive for foreign investors to purchase.

Investors are bullish on the greenback because the market widely expects the Federal Reserve to raise interest rates at next month’s Federal Open Market Committee (FOMC) policy meeting. The CME Group FedWatch tool has pegged the odds of a December rate hike at 78%.

Even with falling prices, hedge funds and money managers appear to be bullish on the precious metal, slashing their net short positions by more than 8,000 contracts in the week ending November 6, according to the US Commodity Futures Trading Commission (CFTC).

In other metals markets, December copper futures dipped $0.01, or 0.32%, to $2.67 a pound. December platinum futures shed $8.30, or 0.97%, to $847.70 per ounce. December palladium futures plummeted $13.20, or 1.2%, to $1,084.30 an ounce.

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