Gold falls on stronger dollar

The price of gold fell on Monday morning on the appreciation of the US dollar after the US Fed announced intention to adhere to the tightening of monetary policy, Report informs.

The price of December futures for gold on the New York Comex exchange fell by $4.85, or 0.27%, to $1,764.55 per troy ounce. December silver futures fell 0.39% to $21.582 an ounce.

The dollar index (the exchange rate against a basket of currencies of six US trading partners) rose by 0.56% to 106.89 points. A stronger dollar makes gold less available to buy in other currencies.

On Monday, Fed spokesman Christopher Waller said that the rate will remain high and increase until the regulator sees inflation in a steady downward trend towards the 2% target.

The statements came after statistics about another slowdown in inflation in the United States: in October, consumer price growth slowed to 7.7% from 8%, which was lower than expected. The data reinforced the expectation that the Fed will ease the pace of the increase from 75 basis points to 50 basis points in December. Inflation slowed down for the fourth month in a row, while since the beginning of the year it has not fallen below 7.5%, and has been steadily above the target level since March 2021.

Gold is sensitive to rate signals from the Fed, as they are reflected by the dollar exchange rate, which affects the price of the precious metal. The regulator's "hawkish" comments reinforced expectations for tight monetary policy, which is positive for the dollar and negative for gold.