Gold price slips on stronger dollar, but still near one-month high

New York (Nov 20)  Gold slipped on Monday as the dollar rose, but prices still held near one-month highs hit last week as political and economic uncertainty in the United States
dominated sentiment.

Spot gold was down 0.2 percent at $1,292.1 an ounce at 1241 GMT off Friday's peak of $1,297, its strongest since Oct. 16. U.S. gold futures were down 0.3 percent to $1,292.20 an ounce.

The dollar gained against the euro after German Chancellor Angela Merkel's efforts to form a three-way coalition government failed. Merkel said she would inform the German
president that she could not form a coalition, after the pro-business Free Democrats (FDP) withdrew from negotiations.

The prospect of higher U.S. interest rates in December when the Federal Reserve meets was also helping the dollar against other major currencies such as the yen       .            

"For gold, there are headwinds in the guise of U.S. interest rate rises, which means higher front-end bond yield curves and
an opportunity cost for holding gold," said Societe Generale analyst Robin Bhar.

Higher rates typically mean sales of short-dated bonds, pushing up yields and make them cheaper for other investors, offering higher returns than gold which earns nothing and costs money to store and insure.
    "Against the backdrop of overall benign financial markets,
gold has been soft for most of this year, mirroring overall
demand weakness in the physical gold market," Julius Baer
analysts said in a note.
    However, concern about an investigation into alleged Russian
meddling in the 2016 U.S. presidential election and tax reforms
in the United States were expected to help sustain gold.
                        
    "Attention has shifted to (the tax bill's) prospects in the
Senate where we think the measure faces a more uncertain path,"
INTL FCStone analyst Edward Meir said in a note.
    On the technical front, gold is struggling to hold above the
55-day moving average at around $1,291. Further resistance comes
in at $1,297, the high on Friday.
    Silver was down 0.7 percent at $17.19 an ounce and
platinum fell 0.8 percent to $942.65.
    Palladium gained 0.2 percent to $995.72 an ounce.
    Traders said palladium could come under pressure from news
that Norilsk Nickel is planning to boost purchases of
palladium for its fund from Russian central bank reserves to
help ease shortages in the market.
    An executive at Norilsk, the world's largest palladium
producer, told Reuters that purchases in 2017 would rise to as
much as 600,000 ounces. This compares with about five tonnes
(160,764 ounces) last year.

Reuters