gold futures

gold futures

November 23, 2015

Gold, silver and copper traded near multi-year lows on Monday, as a broadly stronger U.S. dollar dampened appetite for the metals.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.16% at a seven-month high of 99.81.

Dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.

Demand for the greenback continued to be underpinned by expectations that the Federal Reserve is on track to raise interest rates next month.

Gold for December delivery on the Comex division of the New York Mercantile Exchange dropped $10.10, or 0.94%, to trade at $1,066.20 a troy ounce during U.S. morning hours. It earlier fell to $1,065.70, not far from last week’s low of $1,062.00, a level not seen in almost six years.

Gold futures are nearly 10% below highs hit in mid-October amid mounting expectations the Federal Reserve will raise rates for the first time in nearly a decade at its mid-December meeting.

Also on the Comex, silver for December delivery declined 19.1 cents, or 1.35%, to trade at $13.90 a troy ounce after falling to $13.85 earlier, the lowest since August 2009.

Expectations of higher borrowing rates going forward is considered bearish for precious metals, as they struggle to compete with yield-bearing assets when rates are on the rise.

Elsewhere in metals trading, copper for March delivery shed 4.7 cents, or 2.31%, to trade at $2.012 a pound. It earlier fell to $2.001, the weakest level since May 2009.

Copper prices are down nearly 30% since May as fears of a China-led global economic slowdown spooked traders and rattled sentiment.

The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.

In the week ahead, market players will focus on a flurry of U.S. economic data for further indications on the strength of the economy and the likelihood of a December rate hike.

Most Fed officials believe there is a strong case to begin raising interest rates at the central bank’s December 15-16 meeting, as long as U.S. economic data does not disappoint in the coming weeks.

U.S. markets will be closed Thursday for the Thanksgiving holiday and Friday will be a half day.