The U.S. dollar has climbed to its highest level in over six months, driven by the anticipation of inflationary import tariffs under President-elect Donald Trump's policies. This dollar strength has caused a significant drop in gold prices, reaching nearly a two-month low. Additionally, substantial outflows from gold ETFs have added to the downward pressure on gold prices.
In the foreign exchange markets, the euro fell against the dollar to 1.0620, and the British pound dropped to 1.2740. The Japanese yen weakened to 154.56 per dollar. This dollar rally is a continuation of post-election trends, with analysts expecting further strength in the USD as Trump's policies, including potential tariff hikes, are viewed favorably by the market.
On the stock market front, U.S. indices saw a slight decline. The Dow Jones Industrial Average slipped 0.87% to close at 43,910.98, while the S&P 500 fell 0.29% to 5,983.99. The Nasdaq Composite also edged down 0.09% to 19,281.40. This marked an end to the five-day winning streak for both the tech-heavy Nasdaq and the S&P 500.
European markets also faced declines, with the Stoxx 600 index falling about 2%, marking its largest single-day drop since early August. Key indices like Germany's DAX and France's CAC 40 saw significant decreases as well.
In commodities, the strong dollar increased the opportunity cost of holding gold, leading to a sharp decrease. Spot gold dropped by $21.20, or 0.81%, to $2,598.03 per ounce. The price reached as low as $2,589.40 during trading. Silver saw a modest increase, closing at $30.70 per ounce.
Oil prices experienced minor gains as investors weighed the continuous downward revisions of global oil demand by OPEC. West Texas Intermediate (WTI) crude for December delivery rose slightly to $68.12 per barrel, while Brent crude for January delivery edged up to $71.89 per barrel.
