Gold buffeted by strong US dollar
Frankfurt (Dec 15) Gold prices were lower in Europe in mid-morning trading on Monday, weighed down by a stronger dollar, with spot gold at $US1,214.09 a troy ounce, down 0.7 per cent.
"Gold prices reacted negatively to a firmer dollar," analysts at ANZ Research said.
Gold is priced in dollars and grows more expensive to buy for other currency-holders when the greenback gains, often resulting in drops in demand and price falls.
Analysts speculate that this could be the beginning of a new downturn for gold ahead of the US Federal Open Market Committee meeting this week.
"Gold prices this morning are reflecting a bit of selling pressure, but more importantly, the FOMC meeting this week presents a real selling threat to gold. The Fed is widely tipped to show more hawkish signs in their FOMC statement, and gold's elevated position means there is plenty of room for gold to fall," said Howie Lee, an investment analyst at Phillip Futures.
All the precious metals had the dollar blues. Silver was down 0.8 per cent at $US16.882 an ounce, platinum was down 0.3 per cent at $US1,220.50 an ounce, and palladium was down 0.1 per cent at $US811.80 an ounce.