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The gold price is under pressure as the US dollar strengthens

Heraeus Precious Metals Review

The gold price is under pressure as the US dollar strengthens and bond yields rise. The Federal Open Market Committee (FOMC) meeting minutes showed that the Fed no longer thinks a recession will occur and inflation risks are to the upside. Market-based odds of a further rate rise have gone up slightly, but it is still not considered a certainty. However, the US dollar has rebounded strongly, having been out of favour as the US economy has performed better than expected and the chances of another rate hike grow. The dollar index has jumped from 99 to 103 in the last five weeks and this has been a headwind for gold which peaked at around the same time as the dollar started rallying. The gold price will likely remain under pressure until yields and the dollar peak.

The gold price dipped below $1,900/oz last week as it fell to its lowest level since March. After having broken this support level the next area of support is $1,810/oz.

Silver is still underperforming gold as the price declines, which has pushed the gold:silver ratio up to over 84 from less than 80 in July. The price is near support but if it falls below $22/oz then the next support level is $20/oz.

The platinum price slipped to its lowest level this year last week, before recovering above $900/oz. The rand weakened to 19.3:1US$ before moving back to 19.0. If the rand continues to weaken, that could drag the price lower.

The palladium price is holding above $1,200/oz but if that support gives way, then there is not much obvious support until $1,130/oz. To the upside, the nearest resistance is $1,350/oz.

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