Gold holds ground as dollar dips

By
Monday, November 28, 2016

Gold held its ground on Monday as the US dollar suffered a short-lived dip.

The yellow metal closed 70 cents lower at US$1,187/oz in London, less than US$2 higher than last week's nine-month low, as the greenback slipped below the 94-euro cents mark in early trading, before recovering to around 94.5 euro cents.

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Gold has fallen around US$100 since Donald Trump's US presidential election victory, partly due to a strengthening dollar linked to the president-elect's proposals to greatly increase infrastructure spending.

"It is likely that the overnight dollar weakness was nothing more than some profit-taking and the short-term trend for the dollar may continue higher," Kitco's Peter Hug said.

"The dollar and US yields continue to be the predominant drivers in the gold trade."

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Despite the positive outlook for the dollar, gold may be supported by political uncertainty, according to Metal Bulletin analyst William Adams.

"But with a lot of significant political uncertainty lying ahead, we expect bargain hunting in gold to support prices – gold should provide a good hedge against fallout from what political policy changes lie ahead, as well as from any correction in super-charged markets," he said.

Analysts are divided over gold's prospects for 2017, with ABN AMRO forecasting a fall to US$1,100/oz and ICBC Standard Bank remaining bullish. Silver ended Monday 21.5 cents higher at US$16.68/oz.