Gold Futures Ease as Dollar and Oil Prices Move Higher

what happened

Gold futures ended lower as gains in the U.S. dollar and oil prices weighed on the metal while tensions in the Middle East continued. Newsmetry API reported that December gold fell 0.6% in New York to $4,189.30 a troy ounce, while silver declined 0.8% to $60.555.

Strong central-bank demand and inflows into gold-backed ETFs have supported gold, according to Paul Hoffman, a data analyst at BestBrokers.com. He said prices had been responding to changing monetary-policy expectations, moves in the U.S. dollar and shifts in investor positioning. September’s correction, he added, showed how quickly sentiment can change even during a broader period of robust demand.

In a separate report, Newsmetry API said front-month gold settled down 0.6% in New York at $4,165.80 a troy ounce, while silver lost 0.9% to $60.141. Kaynat Chainwala of Kotak Neo said the firmer dollar and elevated oil prices had heightened concerns that energy-driven inflation could keep the Federal Reserve on a hawkish policy path. The market is awaiting U.S. CPI on Wednesday, PPI on Thursday and comments from Fed Chairman Kevin Warsh.

why it matters

Gold is being pulled in opposite directions by demand from central banks and ETFs on one side, and by the dollar, oil prices and interest-rate expectations on the other. U.S. inflation data and Kevin Warsh’s comments may shape the market’s view of the Fed’s policy outlook.

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