Gold SPDR Gold Trust (ETF) (NYSEARCA:GLD) is taking the hit as the U.S. dollar (CURRENCY:USD) continues to gain ground against the yen (CURRENCY:JPY) and a host of major Asian currencies. Hopes of oil production cut as OPEC member countries meet also appeared to have distracted investor attention for gold as focus shifts to energy and bank stocks. Gold prices fell in Thursday trading, continuing a string of losses for the yellow metal this week as a stronger dollar makes it more expensive for buyers who don’t hold the greenback.
Gold up 16% in 2016
Spot gold price touched a low of $1,228.70 per ounce, but managed to gain some ground to $1,232.50. U.S. gold futures traded south 1.4%. Overall, 2016 has been a great year for gold so far, more than offsetting losses of the previous years as bullion has in recent months hit multiyear highs. So far, gold has rallied 16%, mainly benefiting from uncertainty of U.S. interest rates hikes and continued decay of crude oil prices.
Fed rate hikes
Although investors expected the Fed to move quickly and raise interest rates this year, possibly performing four rate hikes in 2016, those hopes are fading. The Fed is now planning only two rate hikes in 2016 down from four and nobody knows even when the first rate increase will come.
iPath S&P GSCI Crude Oil Total Return (NYSEARCA:OIL) chatters
Bloodbath in the energy sector helped lift gold prices until recently when major oil producers appeared to be pondering more concrete measures to contain the problem. OPEC members will be meeting this Sunday in Doha to possibly discussion plans to reduce their crude output to try and address crude supply glut that has damaged prices.
Although some OPEC members have recently seemed to cast doubts about reaching a concrete deal to reduce oil production, investors are keeping hopes alive, and gold is suffering.
Gold thrives when the dollar is weaker as the commodity is cheap for foreign buyers whose use currencies other than the greenback.
Other precious metals
Spot silver traded south 0.95% and spot platinum fell 0.88%.