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Gold and Silver Fell amid the Stronger Dollar on November 16

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Nov. 18 2016, Published 6:56 a.m. ET

Gold and silver fell on November 16

After rising on November 15, gold and silver pared the gains on November 16. On November 16, the COMEX gold futures contract for December delivery closed the day at $1,226.60 per ounce—a fall of ~0.02%. The silver futures contract for December delivery fell ~0.59% to $16.98 per ounce.

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Stronger dollar and expectations of an interest rate hike

The stronger dollar along with the high expectation of an interest rate hike are weighing on precious metal prices. Gold started the week on a negative note. It reached five-month low price levels on November 14 after falling for six consecutive trading days. Donald Trump’s words on increased fiscal spending and tax cuts raised hopes of economic growth and inflation. It lowered the demand for gold. After a brief recovery on November 15, the bearish factors, especially hopes of an interest rate hike, continued to impact gold prices.

Eric S. Rosengren, the Boston Fed president, commented that the interest rate hike in the December FOMC meeting is “plausible.” As of November 16, the chance of an interest rate hike in the December FOMC meeting is 85.8%. The next US monitory policy announcement will be released on December 14. These comments along with higher chances of an interest rate hike in the Fed’s December meeting pushed the dollar higher to 13-year high price levels and weighed on gold prices. The firmer dollar weighs on dollar-denominated commodities such as copper, gold, and silver.

On November 16, the precious metal producers Barrick Gold (ABX), Silver Wheaton (SLW), and Royal Gold (RGLD) rose 0.13%, 0.69%, and 0.32%, respectively. Newmont Mining (NEM) fell 0.41%. The SPDR Gold Trust ETF (GLD) fell 0.3%.

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