Gold registered a shocking drop closing the trading session “psychologically” below the $1, 168 mark as the strong dollar continues to push the commodity further down. Since the February, the commodity has not reached levels as low as $1, 168. But experts believe that the precious metal is likely to fall below $1, 168, results which have not been seen since the beginning of February.
What is causing the precious metal to lose?
The continued drop in the dollar is not something new to experts. It is natural for gold to lose each time the dollar gains. When gold is priced in the dollar currency, it is more expensive to buy using other currencies. Therefore, other currency holders begin to shun the commodity. The recent rise in the dollar which has seen the dollar index hit marks not seen since 2003 have forced other currency holders to shun the commodity. Therefore, its continued drop does not really come as a shock to most experts.
There is also a looming Fed reserve rate hike which has caused the dollar to gain more on a daily basis. Investors believe that the Fed reserve hike is around the corner and may be in effect come December. Although this news is yet to be confirmed, it is quite strong and is significant enough to influence the market prices.
It is also understood that the new US president Donald Trump is likely to initiate a fiscal stimulus package which will guide the US into mega spending. All these speculations have sieged the rise of the commodity.
Other metals such as silver and copper also lost, although their losses were not as significant as those registered by the gold. Copper was trading at $2.65 for a pound while silver was trading at $16.27.