Gold Price News: Gold Falls to Two-Month Low as Dollar Strengthens

Gold prices edged lower on Tuesday, falling to a two-month low as the US dollar made gains in the wake of the US Presidential election.

Prices eased as low as $2,590 an ounce on Tuesday before edging back up to around $2,615 an ounce later in the session. That compared with around $2,624 an ounce in late trades on Monday.

Dollar rises, markets mull higher inflation

The US dollar strengthened against other major currencies on Tuesday, moving to a one-year high against the euro. A stronger dollar makes dollar-denominated gold more expensive for buyers in other currencies, weighing on demand.

Moreover, the US Presidential electoral win by Republican nominee Donald Trump has boosted expectations that America could impose trade tariffs, potentially driving inflation higher. This in turn suggests a lower probability of further interest rate cuts by the US Fed – a negative factor for non-yield-bearing assets like gold.

Meanwhile, global gold ETFs saw outflows of $809 million (12 tonnes) during the first week of November, with most of the outflows coming from North America, the World Gold Council said in a report Tuesday: Gold Market Commentary: Under pressure | World Gold Council. This may have reflected an unwinding of hedges placed ahead of the November 5^th US election.

Technical analysis

On the technical charts, gold’s recent losses have taken the precious metal’s price far below the 20-day moving average at $2,715 an ounce and the 50-day moving average at $2,649 an ounce. This leaves gold prices within striking distance of rising oblique minor support at $2,561 an ounce. A bounce off this level could indicate that bearish momentum has slowed in the short-term, while any failure of that level could see gold testing further horizontal support at around $2,475 to $2,485 an ounce – a level linked to price action in early September.

Upcoming data to watch out for

Looking ahead, Wednesday will see monthly US inflation rates, followed by Thursday’s Producer Price Inflation – both for October. Both of these releases will be closely watched as the markets try to chart the path forward for interest rates as expectations have shifted following the electoral win by President-elect Donald Trump.