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Gold and Silver Fell, Increased Chances of an Interest Rate Hike

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Nov. 18 2016, Published 8:20 a.m. ET

Gold and silver fell

Gold and silver fell on November 17 amid the stronger dollar and increased chances of an interest rate hike. On November 17, the COMEX gold futures contract for December delivery fell to $1,214.40 per ounce—a fall of 0.99%. The silver futures contract for December delivery fell 1.9% to $16.66 per ounce.

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Stronger dollar and interest rate hike expectations  

After weakness on November 15–16, gold continued to fall and reached the lowest levels since June 2 on November 17. The rise of the US dollar after Fed Chair Janet Yellen’s testimony to the Joint Economic Committee of Congress pushed gold prices lower. She commented that the interest rate hike will happen “relatively soon.” It made the dollar rise to multiyear highs. The stronger dollar weighs on dollar-denominated commodities such as copper, gold, and silver. Yellen added that the economy is progressing according to the Fed’s goals. It increased the expectations of an interest rate hike in December. As of November 17, the chance of an interest rate hike in December was at 95.4%.

Stronger US jobless claims and housing starts

The better-than-expected US initial jobless claims and housing starts data also dented the sentiment in the gold market. According to the data released by the US Department of Labor at 8:30 PM EST on November 17, the initial jobless claims fell to 235,000—the lowest level in four decades. At the same time, the Census Bureau released the housing starts data. The data rose to 1.32 million or a 25.5% rise—the highest in nine years. The stronger economic data took the shine out of safe-haven assets such as gold and silver.

On November 17, precious metal producers Barrick Gold (ABX), Newmont Mining (NEM), Silver Wheaton (SLW), and Royal Gold (RGLD) fell 1.8%, 3.1%, 3.2%, and 1.9%, respectively. The SPDR Gold Trust ETF (GLD) fell 0.53%.

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