Gold prices dropped significantly, reaching the weekly lows, helped by the appreciation of the US dollar and the statements of the Federal Reserve’s Yellen.
The dollar index (the dollar v bsasket of six major US trading partners) is trading with an increase of 0.30%. Recall, the strengthening of the US currency negatively affects the gold, making it more expensive for holders of foreign currencies.
Yellen, in his speech to Congress, said that the Fed is seriously considering the possibility of simplifying the rules on the control of capital for small banks. She also added that the US banking system is well capitalized, credit growth accelerated, and the number of bad loans is reduced. However, Yellen did not comment on the outlook for the economy or the Fed’s monetary policy. According to the futures market, the likelihood of a Fed hike is 57.4% in December against 47.6% the previous day.
Experts point out that in the short term investors are likely to scrutinize incoming economic data in the search of the state of the US economy. The market will also continue to consider the risk of US elections, as well as how it may affect the policy on inflation and the Fed.
Gold reserves of the largest investment fund SPDR Gold Trust fell yesterday 0.22 percent, reaching the level of 949.14 tons.
The cost of the October futures for gold on the COMEX fell to $ 1318.4 per ounce.
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