Gold drops to 5-1/2 month low on Dollar rally

Rising Treasury yields and the resulting dollar strength have pushed Gold prices to 5-1/2 month low of $1213.40/Oz levels.

Gold pricing-in a Fed rate hike

The sell-off in the metal is more due to the fact that the December Fed rate hike bets have stayed above 81% despite Trump victory. Moreover, there was a widespread belief in the market that a Trump victory would trigger financial market instability and thus would force the Fed to delay the rate hike.

The American dollar is on fire, trading at multi-month highs against most majors. The USD index was last seen trading 0.60% higher on the day around 99.56. Consequently, the yellow metal dropped as well in Asia and was last seen trading around $1219/Oz levels.

Gold Technical Levels

A breach of support at $1213.40 (session low) would open doors for a drop to $1200 (zero figure), under which losses could be extended to $1191.57 (Oct 15, 2015 low). On the other side, a rise above $1231 (session high) would expose $1241.50 (Oct 7 low) and $1251.20 (5-DMA).