US Dollar’s rally punishes gold as silver nears bear market

New Yord (Nov 20)  Gold slid to a five-month low and silver neared a bear market as the dollar rallied amid mounting expectation for higher U.S. interest rates.

Federal Reserve Chair Janet Yellen said Thursday the central bank is close to raising rates next month. Consequently the dollar and bond yields are rising and investors are selling assets that don’t pay interest.

Traders have raised bets on higher borrowing costs after President-electTrump’s pledge to boost spending and as U.S. data pointed to an improving economy. That helped send a gauge of the dollar to a nine-month high. Investors sold 30.5 metric tons of gold from bullion-backed funds so far this week, the most in three years.

Trump’s policies would be “very, very inflationary; the interest rate is most likely to rise, and the dollar is most likely to rise too,” he said.

That means gold “is going to be the biggest victim,” Takai said.

Source: SeattleTimes