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Gold and Silver Felt the Pressure of Strong Dollar and Equities

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Nov. 23 2016, Published 6:13 p.m. ET

Gold was weaker while silver was stable on November 22

After starting this week on a positive note by gaining on Monday, November 21, COMEX gold futures contracts for December delivery fell lower on November 22. They ended the day at $1,211 per ounce, a drop of 0.4%. The silver futures contracts for December delivery rose 0.67% to $16.63 per ounce.

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Stronger equities and dollar weighed on gold prices

The surge in US equities to record highs on Tuesday, November 22, dented the sentiment of the precious metal market. The expectations of increased growth and spending under Trump’s presidency is supporting the equity markets. The stronger market takes the shine out of the safe-haven assets such as gold. In addition to this, the stronger dollar also weighed on gold prices on November 22. A firmer dollar weighs on dollar-denominated commodities such as crude oil, gold, and silver.

In addition to the equity market and dollar strength, the higher chances of an increase in US interest rates in December are also weighing on gold prices. In her testimony to the Joint Economic Committee of Congress last week, Fed chair Yellen commented that the interest rate hike will happen “relatively soon.” These comments took the strength out of the gold market. The recently released stronger-than-expected US economic data is also one of the factors behind the weakness in the gold market. As of Tuesday, November 22, the chance of an interest rate hike in December was 95.4%.

On Tuesday the precious metal producer Barrick Gold (ABX) fell ~0.26%, whereas Newmont Mining (NEM), Silver Wheaton (SLW), and Royal Gold (RGLD) rose 0.42%, 1.7%, and 1.2%, respectively. The SPDR Gold Trust ETF (GLD) fell 0.03%.

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