Forex

Stronger dollar dragged down gold prices

Dollar beats yen and franc

Due to a much stronger U.S. dollar, the price of gold hovered red zone on Thursday’s close. Investors already started to measure the likelihood for one more interest rate hike later this year; this was supported by figures suggesting a firm jobs market in the United States.

The U.S. dollar index rose about 0.3 percent after the interest rate hike by the U.S. Federal Reserve.

U.S. gold futures lost as much as $21.30 and trades at $1,254.60 an ounce for its August delivery. Meanwhile spot gold edged down more than 0.54 percent to $1,253.84 an ounce, this signifies its lowest level since May 26, a trade when it notched a low of $1,256.65 in the session earlier.

The declines of the yellow metal might be partial but gold is being underpinned by myriad of dilemmas worldwide. A released report regarding U.S. President Donald Trump under investigation also weighed on the bullion. Bernard Dahdah, metal analysts at Natixis, says that just like the rate hike earlier, the market will begin look at the probability of the next rate hike on the following day.

He added that there is a huge chance of more downsides judging by the economics and the Federal Reserve talking about lifting rates again this 2017 will be bad for the precious metal. An interest rate hike is not good for the bullion because it will heighten the opportunity cost of owning gold, which is non-yielding.

Looking at other metals, palladium inched higher by 0.06 percent at $863.50 an ounce, platinum fell 1.52 percent at $921.25 an ounce, while spot silver was 0.63 percent lower to $16.76 an ounce.

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