Gold Prices Fall as Dollar Rises

By David Hodari Features Dow Jones Newswires

The price of gold slipped on Monday morning, as the dollar edged up against the euro after the collapse of talks in Germany to form a governing coalition.

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The precious metal was down 0.22% at $1,291.47 a troy ounce in midmorning trade.

Copper was also down, falling 0.52% to $6,728.50 a metric ton. U.S. Commodity Futures Trading Commission data released Friday revealed that hedge funds sold the base metal for a third-straight week last week.

The euro came under pressure overnight after German Chancellor Angela Merkel's attempts at forming a German government coalition broke down, throwing the direction of Europe's largest economy into doubt.

That prompted gold in euro terms to climb, according to Commerzbank in a note. Gold in dollar terms was relatively unaffected by Germany's political crisis "because the euro has depreciated due to the failed talks," Commerzbank said.

The WSJ Dollar Index, which measures the currency against a basket of 16 others, gained 0.02%, having halted the losses which began late last week.

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It is unclear how the process of forming the next German government will proceed, but "while it is understandable that there has been knee jerk euro sell off...we see no clear reasons at the current juncture to materially alter our outlook for a stronger euro," said Lee Hardman, a currency analyst at MUFG in a note.

Euro watchers were expected to monitor speeches from European Central Bank executive board members over the course of the coming days, with U.S. jobs data expected Wednesday also in focus ahead of the U.S. Thanksgiving holiday.

Among precious metals, silver was down 0.69% at $17.19 a troy ounce, palladium rose 0.66% to $998.50 a troy ounce and platinum fell 1% to $944 a troy ounce.

Among base metals, zinc fell 0.71% to $3,160.50 a metric ton, aluminum fell 1.37% to $2,080.50 a metric ton, tin was flat at $19,500 a metric ton, nickel fell 0.22% to $11,570 a metric ton and lead fell 0.59% to $2,430.50 a metric ton.

Write to David Hodari at David.Hodari@dowjones.com

Gold prices fell Monday as the dollar recovered.

Gold for December delivery declined 1.6% to $1,275.30 a troy ounce on the Comex division of the New York Mercantile Exchange. After its best day since May Friday, the precious metal closed at its highest level in a month with the dollar falling.

However, the dollar bounced back Monday following a second straight week of declines, making gold and other dollar-denominated commodities more expensive for foreign buyers. The WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, was up 0.3% Monday.

Gold prices are roughly 5.5% below their year-to-date highs from September, weighed down by a stronger dollar and interest-rate concerns.

"The trend has been paying attention to the dollar market," said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. "What's interesting to me is it seems like speculators are trying to be bullish...The fundamentals seem to be against them."

The latest data from the Commodity Futures Trading Commission released Friday showed that net bets on higher gold prices by hedge funds and other speculative investors rose to their highest level in six weeks during the week ended Nov. 14.

The euro edged down against the dollar Monday after negotiations to form the German government broke down, weighing on gold prices. Investors were also monitoring news out of Washington related to the Republican tax bill's progress in the Senate, as concerns about the bill passing have impacted the dollar in recent sessions.

Some analysts have said signs of geopolitical turbulence could also keep gold prices near $1,300 because many investors believe gold and other haven assets will hold their value better if markets turn rocky.

Investors will also be paying close attention to central-bank signals and signs of inflation in the U.S. ahead of the Federal Reserve's December meeting. A rate increase is widely expected next month, but some traders will be watching for clues about the central bank's plans moving forward because gold struggles to compete with yield-bearing assets like Treasurys as borrowing costs rise. Minutes from the Fed's last meeting are scheduled to be released Wednesday.

Among base metals, copper for December delivery rose 0.8% to $3.0930 a pound. The industrial metal's rally has largely stalled in recent weeks with prices roughly 4.5% off their three-year highs from last month amid demand concerns surrounding China, the world's largest consumer. Still, copper has gained more than 20% in 2017.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and David Hodari at David.Hodari@dowjones.com

(END) Dow Jones Newswires

November 20, 2017 14:33 ET (19:33 GMT)