Rise in dollar drives safe haven gold to nine month lowComments Off on Rise in dollar drives safe haven gold to nine month low
GOLD bugs were in retreat today as the price of the precious metal was beaten down to a nine-month low by a rampant US dollar.
The metal fell almost 1% to $1171 an ounce at one stage as investors moved their money out of the traditional safe haven ahead of an expected interest rate rise from the Federal Reserve’s boss Janet Yellen (pictured) next month.
That’s been good news for the greenback, as well as the infrastructure spending spree planned by President-elect Donald Trump.
Analysts have pencilled in another two rate hikes from the Fed in 2017.
The performance of the precious metal — down nearly 8% so far this month in its biggest slump since June 2013 — has confounded the predictions of top bankers.
Goldman Sachs forecast before the election that the gold price could jump to almost $1400 if Trump won the White House, and fall back on a Hillary Clinton win.
CMC Markets chief market analyst Michael Hewson said: “Gold has taken a significant hit on the fact that the Fed is going to be raising rates more than once. But if inflation is on the way back, then gold is seen as the traditional inflation hedge. Also, the big risks have not gone away — the European banking system is looking fragile and a stronger dollar could make that worse.”