Gold price falls to two-week low on strong dollar

Gold fell to its lowest in more than two weeks on Tuesday morning in London, pressured lower by a stronger dollar after the release of upbeat US data.

– The spot gold price was last at $1,308.60/1,308.90 per ounce, down $4.10 on Monday’s close. It fell to a low of $1,307.10 earlier, its weakest since September 16.

– The dollar index was last at a stronger 96.13, supported by forecast-beating US data yesterday. The US final manufacturing PMI for September came in at 51.5, close to the expected 51.4, and the ISM manufacturing PMI for September at 51.5 surprised beat the expected 50.4. But ISM manufacturing prices for September and construction spending for August both undershot at -0.7 percent and 53 respectively.

– The rebound in the US manufacturing PMI in September after an unexpected drop to 49.4 in August has lifted the odds of a December rate rise, Angus Nicholson, a market analyst at IG, noted. Market participants currently see a 62.1-percent chance of the Fed listing rates in the last month of the year, according to the CME Group FedWatch Tool.

– “The precious metals, with the exception of palladium, are under pressure and look vulnerable,” William Adams, FastMarkets head of research, said. “Platinum has already broken below recent support and gold and silver prices are holding down in low ground. The stronger dollar and better economic data may well prompt more long liquidation by funds.”

– In the other precious metals, silver was last at $18.790/18.810 per ounce, little changed from the previous close. Platinum at $1,002/1,008 was $2 higher and palladium at $711/717 was up $4.

(Editing by Mark Shaw)

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