2014.11.1923:20:54UTC+00Gold falls to under $1,200 amidst surging dollar and shrinking SPDR

Gold continued trading below the $1,200 level with the US dollar surging to a five year high on outlook that its borrowing costs are nearing an increase amidst a contraction in the biggest exchange traded product backed by the metal.

Spot gold alternated between losses and gains of at least 0.3% and was trading at a price per ounce of $1,179.24 mid morning Singapore time, slightly down from yesterday’s $1,182.68, based on generic pricing from Bloomberg. The precious metal declined by 1.2% yesterday after demand was weakened due to its two week rally that made it reach $1,204.68 on November 18th.

The Bloomberg Dollar Spot Index is on track to record its best close since March 2009, partly due to the yen becoming weaker after Japan broadened its stimulus measures and the Federal Reserve released the minutes of its latest meeting. Assets under the SPDR Gold Trust fell to the lowest level since September 2008 yesterday after rising for the first time in two weeks on November 17th.

Analyst Zhu Runyu from CITIC Futures Co. says that, “We’re seeing significant differentiation between the Fed’s policy and those of other central banks, which makes it difficult to see dollar weakness ahead. It will be difficult for gold to stage any meaningful rally against such a backdrop.”

Futures for gold with a delivery date in December fell by 1.4% for a price per ounce of $1,177.70 to continue yesterday’s 0.3% drop in New York’s Comex.

Spot silver lost 0.7% of its value to $16.0337 per ounce. Platinum for immediate delivery fell by 0.2% to $1,185.63 per ounce, while palladium was mostly unchanged at $763.25 per ounce.