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Gold price stays low in anticipation of US interest rate rise

Monday, November 30, 2015

Gold prices have remained low today (Monday, 30 November), with a price of £706.46 per troy ounce recorded in the afternoon.

The drop in price is being attributed to an increased level of speculation regarding whether or not the US Federal Reserve will increase interest rates before the end of 2015. Indeed, there is a growing level of expectation that the Fed will opt to raise the rate at its December meeting.

A meeting of the European Central Bank is also due this week (Thursday, 3 December), but reports suggest that any impact it would have had on gold prices is likely to be overshadowed by activity in the US.

The attention of investors and analysts is also being held by the dollar, which is currently running strong. Along with the firm dollar, US non-farm payroll data for November, due for release this Friday (4 December), is under close scrutiny.

The data offers information regarding the number of jobs added or lost by the economy over the past month (not including the farming industries). As a strong indicator of GDP, it is a statistic often monitored by gold price analysts and others looking for signs of which way the Fed will vote on the interest rate, as well as an indicator of the general direction of the financial markets.

Germany's Commerzbank AG spoke to the Wall Street Journal about the matter: “The upcoming rate hike that the US Federal Reserve is expected to implement is presumably keeping the gold price in check.”

Traditionally seen as a financial safe haven during troubled times, analysts have suggested that the current gold price is likely to remain low for some months. Demand, on the other hand, looks to be on the increase, according to the latest report from the World Gold Council.

Published early November, the Q3 Gold Demand Trends Report from the council revealed that gold demand was up by eight per cent year-on-year, reaching a two-year high of 1,120.9 tonnes during the third quarter.