Gold futures slide to more than 5-month low
Gold price could break below $1,200 on 'Trumpflation' fear
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Gold prices fell to a more than five-month low on Monday, extending four straight sessions of losses as market players continued to dump the yellow metal in wake of Donald Trump’s victory in the U.S. presidential election. Gold for December delivery on the Comex division of the New York Mercantile Exchange sank to an intraday low of $1,212.00 a troy ounce, a level not seen since June 3. It was last at $1,219.30 by 3:05AM ET (08:05GMT), down $4.55, or 0.38%. Gold plunged more than 3% on Friday amid optimism that increased fiscal spending and tax cuts under a Trump administration will spur economic growth and inflation, which would ultimately lead to an era of higher interest rates.
Investors are currently pricing an 81.1% chance of a rate hike at the Fed's December 13-14 meeting, according to Investing.com's Fed Rate Monitor Tool. The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced. The U.S. dollar was last up more than 0.6% against a basket of major currencies at 99.60, after climbing to a nine-month high of 99.67 overnight. A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
After a historic week in which U.S. politics dominated market sentiment, investors will get back to the business of watching the Fed and economic data as expectations mount for a December rate hike. Fed Chair Janet Yellen is due to testify on the economic outlook before the U.S. Congress Joint Economic Committee on Thursday, while retail sales and inflation data will also be in the spotlight. Also on the Comex, silver futures for December delivery shed 3.7 cents, or 0.21%, to $17.34 a troy ounce during morning hours in London.
Elsewhere in metals trading, copper futures jumped 5.6 cents, or 2.23%, to $2.565 a pound, remaining within distance of last week's 17-month peak. Prices of the red metal rallied nearly 11% last week after Trump raised the prospect of increased infrastructure spending, while recent signs of strengthening demand in China have also underpinned prices. The metal is regarded as a leading indicator of the global economy. It is used in the construction of buildings, power generation and transmission and the manufacture of consumer electronics.