Gold prices fell further below $1,800 per ounce overnight (Sept. 10). The strong dollar, which normally moves against gold prices, continues to be a factor in the decline in gold prices. Telephone talks between the U.S. President and the Chinese leader have raised hopes for an improvement in the trade conflict between the two countries.
Gold futures fell 0.44% or $7.9 to close at $1,792.1 per ounce.
Silver futures fell 1.15%, or 27.7 cents, to $23.9 an ounce.
Platinum contracts fell 1.85% or $18 to close at $956.5 per ounce.
Palladium contracts fell 0.8% or $ 16.50 to close at $ 2,126.30 an ounce.
The movement index of the dollar against six major currencies in a basket of currencies rose yesterday by 0.10% to 92.5779.
Gold futures were also weighed down by the U.S. producer price index (PPI), which rose 0.7% in August. This was after it had risen by 1% in July.
Meanwhile, speculation continues as to when the Fed will end its loose monetary policy. The Fed is currently still buying bonds worth $120 billion per month. Since the loose monetary policy of the Fed provides the markets with a lot of liquidity, since then the major indices such as S&P 500, Dow Jones, or NASDAQ one new high chases the other. This market environment is rather unfavorable for gold, as gold benefits when investors lose their confidence in fiat currencies.
It remains to be seen how long the Fed will continue the massive stimulus packages as inflation has already risen above 5% and the federal debt continues to rise. This has raised the question of whether the massive debt can ever be repaid and whether hyperinflation can become a reality?
Nothing is likely to change in interest rate policy this year. Even if the Fed were to decide to begin tapering this year, interest rates will probably remain close to 0.