Gold prices fall against strong dollar

<p>Gold prices have hit a two-and-a-half month low following a strong showing from the US dollar.</p>

Gold prices have fallen to a two-and-a-half month low following a strong showing from the US dollar.

December gold futures dropped 1.14 per cent to $1,272.6 (£772.53) on the New York Mercantile Exchange (NYMEX) as of 12:39 BST on Tuesday (September 2nd). This came as a slight recovery to the $1,268.5 it had fallen to earlier in the day, representing the lowest figure since June 18th.

Gold prices have been affected by the strong performance of the US dollar in recent days. As gold declines the ICE US Dollar Index had increased 0.23 per cent to 82.97, a slight drop in its two month peak of 83. It had not reached this level since July 18th, 2013 but was making its seventh consecutive weekly gain. The dollar index's 14-day relative-strength index (RSI) has also remained strong, staying about 70 since August 19th.

It has been a turbulent time for gold prices of late, as it has been constantly declining throughout the month of August. On August 25th it had dropped 0.3 per cent to $1,277.19 but there had been interest from the Asian markets with jewellery buyers being attracted by the drop in bullion price.

Tensions in Ukraine have been cited as another factor in gold's poor performance. There has been an escalation in conflict between Ukraine and pro-Russian separatists with Nato accusing Russia of sending troops over the border to fight, something which the Kremlin strongly denies.

Speaking to Reuters, a Hong Kong-based bullion trader said: "It does seem like gold is struggling. Ukraine tensions remain unresolved and yet gold is below $1,300 […] People are concerned about the dollar strength and I think we will trade in a tight range between $1,278 and $1,290 until we get European Central Bank and non-farm payrolls out of the way."

Find out about commodities trading and learn CFD strategies at City Index

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.