Gold Prices Plummet amid Dollar Spike

Gold prices dip amid the dollar's exhibition of gains after Japanese Prime Minister Shinzo Abe's victory over Sunday's election. 

Gold prices slipped on Monday in Asia while the dollar showed solid gains following Japan’s Premier Shinzo Abe’s victory on Sunday’s election, fueling speculations of continued easy monetary policy.

Abe’s landslide victory has also made Japanese stocks soar higherthan last week, with Nikkei 225 boasting a 1.2 percent gain.

Gold futures for December delivery dipped 0.24 percent to $1, 277.39 a troy ounce in the New York Mercantile Exchange’s Comex division.

The prices have been further pressured down by the stronger US dollar, which has received an upward push after US president Donald Trump’s proposal to overhaul the tax code cleared another crucial hurdle.

Gold became more expensive on Friday, after the dollar was pulled upwards by the announcement of the Senate’s approval of a budget blueprint, which will enable them to move on to the tax cuts without support from the Democratic Party.

The index settled at 0.69 percent last week, and this was its fifth weekly increase in six weeks. Investors are anticipating a fiscal boost to push up inflation, and this adds to the pressure the US Federal Reserve is receiving.

Gold, being highly sensitive to rising rates, lifts the opportunity cost of grabbing non-yielding assets like bullion while boosting the dollar, in which it is valued.

Silver plummeted 1.21 percent at $17.04 a troy ounce late last Friday, making its weekly decline to 2.22 percent.

Platinum settled at $926.00.

Among base metals, copper achieved early gains and settled at $3.169 per pound. It was still increased up 1.03 percent for the week following Monday’s rally to three-year highs, riding the back of an optimistic Chinese economic data.

China, the world’s second largest economy, accounts for nearly half of the world’s largest refined copper consumption.

Forecasts

The White House has been cautioned by analysts that the tax reform is still going on a long battle.

Republicans still have to produce a tax reform bill in the midst of divisions regarding the nature of the cuts to make, and how to pay for them. Analysts have cautioned the White House, reminding it that it still has a long and uphill battle to through its agenda.

Meanwhile, most investors are likely to keep their eyes in the coming week as they follow the European Central Bank meeting to get further details regarding the plans to scale back its massive stimulus program.

The markets are also keeping close tabs on a preliminary reading of US growth in the third quarter, in order for them to assess the impact of recent hurricanes, Harvey and Irma, on the economic activity.

The US has recently expressed its intention to solidify its economic and defensive ties with India in the light of the power emerging from China, which has recently released its third quarter economic assessment.

Investors and experts will also keep close tabs on how the impact of the hurricanes can influence the Federal Reserve’s view on monetary policy.

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