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Gold Dips Lower

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Gold dips lower

Gold Dips Lower

Aug 4 2015, 11.25am GMT

STOCK.com

Gold futures suffered a battering in July and started the first trading day of August by dipping below $1,090 per ounce on Monday, to be at its lowest value in over five years.

In similarity with oil, which is the other big news commodity as prices have taken a pounding, gold is beset by a number of factors that are all converging to push the price down.

The strong dollar (USD), which makes the metal more expensive in other currencies, is just one reason for the downward price spiral.

Speculation on a Federal Reserve rate hike in September could have, as a side effect, a further strengthening in the dollar amongst others. The ICE U.S. Dollar Index (DXY, -0.11%) which measures the value of the USD against a basket of six rival currencies, was higher on Monday at 97.4950 against the 97.2290 recorded in late trade on Friday.

Other factors that could influence the gold price are the U.S. employment data due on 8 August as well as other reports due that will act as a gauge of the health of the U.S. economy as well as its growth prospects.

The apparent slowdown in the Chinese economy seems set to continue with the latest Caixin manufacturer’s manager’s index, indicating a further contraction in industrial activity.

Fawad Razaqzada, technical analyst at Forex.com, said, “Gold is coming under pressure from all angles. Clearly, gold traders are worried about the impact of the forthcoming U.S. interest rate rise, which is underpinning the dollar and undermining the buck-denominated precious metal.”

Razaqzada also commented that the relatively “stronger equity markets” and the “lack of global inflation are also weighing on the gold price” of U.S. global Investors

Speaking to Kitco, Frank Holmes, Chief Executive commented that gold was acting more like a raw commodity than a safe-haven. He also noted that the key outside markets are also in a bearish posture for gold as the U.S. dollar index is higher and crude oil prices are lower.

Kitco spot gold was last trading $1089.80 per ounce, down $5.40 from the Friday closure.

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