Gold Lower as Fundamentals Favor Stronger Dollar

Gold is lower on Friday as the US dollar is back from the Thanksgiving holiday gaining against most major pairs. Trade concerns have increased as the APEC summit once again highlighted how far apart the US and China are on trade. Oil prices suffered the most form the strength of the dollar, in comparison the yellow metal will remain attractive due to geopolitical risk ahead of a busy week.

British PM Theresa May is trying to push through parliament a Brexit deal as she faces mounting obstacles. Trade disputes are on the rise as the end of the APEC highlighted that protectionist measures are here to stay.

Gold is also under pressure as despite some US fundamental hiccups the dollar remains supported by the U.S. Federal Reserve. The minutes of the latest FOMC meeting will be published and investors will be looking for clues on what the central bank has in mind for 2019.

The December FOMC meeting is expected to conclude with a 25 basis rate hike, Fed funds futures point to a 74.1 percent probability, but some dovish comments from Fed members have raised questions on how much more interest lifts are needed to reach a neutral rate.

Gold remains a safe haven destination, but for the time being market conditions favor the US dollar due to trade concerns and central bank expectations.

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza