Gold Down for Third-Straight Day as $1,200 Tested

Investing.com – The dollar’s strength is slowly and surely constricting gold, and it may just be days before bullion’s $1,200 support is broken.

In Monday’s session, worries over Brexit negotiations dealt a fresh blow to the sterling, pushing up the greenback, which is a contrarian bet to the dollar. The , which measures the greenback against a basket of six currencies, rose 0.7%.

U.S. for December delivery fell to an October bottom of $1,201.40 per troy ounce before settling at $1,203.50, down $5.10, or 0.4% on the day. It was a third straight day of losses for the yellow metal, which has lost about $20, or 1.5% since its last positive settlement on Nov 7.

Monday’s bottom and settlement also left the December with a precariously small buffer to protect the $1,200 support, which had been the market’s bedrock since September.

“There seems to be no stopping the dollar from increasing. It all has to do with the weakness in other world currencies boosting the dollar which, in turn, continues to pressure the price of gold,” said Walter Pehowich, executive vice-president at Dillon Gage Metals in Addison, Texas.

“The holders of long positions strongly believe that the dollar’s recent climb to last week’s 16-month high is extremely overextended, and expect a correction to drive a significant short covering rally in hold,” Pehowich added.

The dollar rallied last week after strong U.S. producer price index data on Friday became an endorsement for the Federal Reserve to raise interest rates again in December.

The Fed has already hiked rates three times this year and is determined to stay ahead of the inflationary curve with more increases in 2019 after the robust growth seen lately in the US economy.

Dealers are looking out for this week’s consumer price index () and data to see if they beat expectations and further inflate the dollar.

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