ECM: Significantly firmer US dollar weighs on gold price
Under pressure from the significantly firmer US dollar, gold dropped back to $1,130 per troy ounce yesterday. At the same time, however, the appreciating US currency drove gold in euro terms up to a good €1,010 per troy ounce.
"In recent days, a number of Fed members have expressed the belief that the US Federal Reserve will hike interest rates before this year is out. Based on the Fed Fund Futures (bets on the US key rate), a nearly 50% probability of an interest rate hike in December is now priced in", says Commerzbank.
Simultaneously, however, ECB representatives have expressed precisely the opposite view, claiming that the ECB "would forcefully react" if the central bank's inflation target were at risk. This will doubtless result in increased speculation about an expansion of the ECB's QE programme.
