Gold price and silver creep higher as dollar loses momentum

New York (Nov 25)  Gold and silver rose slightly Friday on a weakening US dollar. The yellow metal ended US$1.60 higher at US$1,187.70/oz in London, up US$2.35 from the nine-month low on November 23 and US$1.60 from Thursday's close, with silver climbing 15.5 cents from a five-month low to US$16.465/oz.

The improvements came as the greenback edged below 94.5 euro cents, having briefly nosed above 95 euro cents on Thursday for the first time since March 2015.

US$/ozAverage monthly gold priceOctober 2016 shows a 9% rise year-on-year201420152016JanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecember11001200130014001000Source: BNamericas.com with data from Chilean Copper Commission

As well as rising US bond yields following president-elect Donald Trump's pledge to greatly increase infrastructure spending, expectations of interest rate hikes are undermining gold, according to Commerzbank.

"Many market participants clearly expect the US Federal Reserve to hike interest rates several times over the next few months as inflation looks set to rise in the wake of Donald Trump's election victory, and are therefore selling gold," the German bank said.

But lower prices will generate physical buying interest, it added.

"Given that there is still a lot of uncertainty in the political arena, we would have thought the pullback in gold prices would start to attract bargain hunting, especially if the rallies in other markets start to show signs of tiring," Metal Bulletin analyst William Adams said.

Source: BNamericas