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Gold Fell to 5-Month Low Price Levels on November 14

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Nov. 15 2016, Published 8:47 a.m. ET

Gold and silver fell on Monday

After falling more than 6% in the week ending on November 11, gold prices fell to five-month low price levels on November 14. On November 14, the COMEX gold futures contract for December delivery fell 0.47% to 1,223.45 per ounce. The silver futures contract for December delivery fell to $16.94 per ounce—a fall of 3.1%.

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Stronger dollar and Treasury yields weighed on gold

Gold fell for the third consecutive trading day due to strong Treasury yields and the US dollar. Improved market sentiment after Donald Trump won the US presidential election supported the dollar and Treasury yields. The US dollar rose for six consecutive trading days and reached 11-month high price levels. The US ten-year Treasury yields rose to 2.3%—the highest level since December 2015. The stronger US dollar takes the shine out of safe-haven assets and weighs gold and silver. The prices reached five-month low levels. Trump’s words on increased fiscal spending and tax cuts raised hopes of economic growth and inflation. It lowered the demand for gold.

Increased chances of an interest rate hike

On the other hand, the increased chances of an interest rate hike in December 2016 also weighed on precious metal prices. As of November 14, the chance of an interest rate hike is at 81.1%. On November 17, Fed Chair Janet Yellen will testify on the economic outlook at the US Congress Joint Economic Committee. Important economic drivers such as inflation and retail sales will also be discussed.

On November 14, precious metal producer Barrick Gold (ABX) fell ~1.4%. Newmont Mining (NEM), Silver Wheaton (SLW), and Royal Gold (RGLD) rose 3.2%, 2.6%, and 1.4%, respectively. The SPDR Gold Trust ETF (GLD) fell 0.83%.

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