Precious Metals Market Review by Bill Musgrave – American Gold Exchange
November 5, 2014: Gold fell another 1.9%, closing near four-year lows under $1,146, as the dollar surged to a five-year high against major rivals, reducing demand for the metal as an alternative store of value.
The dollar’s rise was fueled by Bank of Japan chief Haruhiko Kuroda’s declaration today that there is “no limit” to the steps that the central bank will take to combat deflation, including deeper quantitative easing for as long as it takes to achieve 2% inflation. The announcement plunged the yen to a new seven-year low against the dollar.
The ECB is also expected to shift toward more easing at its policy meeting this week. Markit reported today that Eurozone companies cut prices by the most since 2010, deepening the deflationary forces that are plaguing the region’s stagnating economies.
The dollar received additional support from U.S. mid-term elections that put Republicans firmly in control of both houses of Congress. The GOP is seen as friendlier toward business and more likely to rein-in the accommodative monetary policies of the Federal Reserve, thereby strengthening the greenback further.
A stronger dollar puts pressure on precious metals and other commodities denominated in it for international trade by making them more expensive to users of other currencies. The other precious metals also fell hard, with silver plunging 3.2% while platinum and palladium dropped 1.2% and 4.2%, respectively.
At the Comex close: December gold fell $22, or 1.9%, to settle at $1,145.70; December silver plunged 51 cents to $15.44; January platinum dropped $14.10 to $1,210.60; and December palladium dropped $32.80 to $757.85 an ounce.