Commodities: Gold price slumps on firmer dollar

November 5, 2017

London (Nov 5)  Precious metal gold fell to a 1 week low on Friday following the release of positive services and unemployment data for the US, helping push the dollar index up 0.31% to 94.975.


Spot gold was down 0.64% to $1,267/oz., while the December contract dropped 0.08% to $1,268/oz. with India's peak wedding season is expected to usher in renewed interest for bullion in coming weeks.


"The data was in a conflicting sequence but it is overall making the case for not just one further rate hike by the Fed in December but also for further, gradual increasing of rates in 2018," said Quantitative Commodity Research consultant Peter Fertig, adding, "The outlook for the interest side remains towards a stronger U.S. dollar so there are headwinds for gold."


Tim Brown at MKS PAMP added further insight in a note to clients: "The general trend for gold over the last week has been positive, but the market will need to find a catalyst within the host of data released tonight to push through the strong resistance at $1,280."


In other precious metals, silver was down 1.68% to $16.83/oz., platinum was 0.63% weaker at $920/oz., while palladium traded just 0.03% lower to $999/oz..


Digital currency bitcoin took another leap higher on Friday, rocketing above $7,000 for the first time after a more than tenfold increase in value over the past year.


It hit as high as $7,500 on the Luxembourg-based Bitstamp exchange on Thursday .


"People should not be surprised by this move, they should try to understand it before dismissing it," said Rahul Sood, CEO of Unikrn, a US sports betting digital platform. "The fact is there is a finite amount of Bitcoin in the world."


Base metals saw copper drop 0.56% to $6,892/tonne after closing little changed in the previous session, following a 10% gain in the past six weeks.


Oil prices rose to near their highest levels in more than 2 years on Friday, supported by rising global demand and physical prices and continuing expectations that OPEC and other producing countries will extend a deal to cut output.


West Texas Intermediate for January delivery gained 1.46% to $55.62/barrel, while benchmark brent crude traded 1.97% higher to $61.85/barrel.


Gene McGillian at Tradition Energy said, "The market continues to find support from expectations that we're going to see the cut extended and from robust demand," adding, "There's an idea that the global economy is looking pretty good."


"China's oil demand growth appears to be accelerating," investment bank Jefferies said.


China's roughly 9 million bpd of imports have surpassed those of the United States to top the world's crude importer list.


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