Gold prices fell slightly, being under pressure from a strengthening US dollar and uncertainty about a Fed hike next week. At the same time, a further fall in prices restrained the negative dynamics of stock markets.

The US Dollar Index, showing the US dollar against a basket of six major currencies, was up 0.25%. Since gold prices are tied to the dollar, a stronger dollar makes the precious metal more expensive for holders of foreign currencies.

The main theme in the markets continues to be yesterday's comments by the Fed Brainard that seem less convincing for a hike and reinforced the view of those investors who believe the Fed in the coming months will keep rates unchanged.

"The focus of is still directed to the possible hike and the dynamics of the market will be completely determined by this expectations.", - Said David Gavett of Marex Spectron.

Gold may continue to trade near $ 1330 resistance before resuming a downward trend, says Reuters technical analyst Wang Tao.

"The probability of Fed rate increase in the short term is reduced, and if the oil quotes stabilize the gold price should find a bottom, at least, before the meeting of the FOMC", - HSBC analyst James Steel said.

The cost of the October futures for gold on the COMEX fell to $ 1324.5 per ounce.

This morning New York WTI crude oil futures fell 1.58% to $ 45.57 and Brent oil futures fell 1.22% to $ 47.73 per barrel. Thus, the black gold is traded lower on the background of concerns about the increase in drilling activity in the US, as well as profit taking. According to experts, the fall in prices shows that the increasing drilling activity in the US still remains a cause for concern, despite the fact that oil quotes finished the Monday session in positive territory on the background of dollar weakness.

"We remain of the view that precious metals such as gold should prove an attractive medium-term buy in the current environment. This is not only due to rising uncertainty about global central banks' ability to stimulate their respective economies; political developments in Europe and elsewhere may unsettle markets somewhat, at least from a broader angle. It may be true that global risk sentiment remains broadly stable. However, a large part of that stability was due to rising liquidity expectations rather than better global growth prospects.

From the current levels, we see limited room for major central banks such as the Fed or ECB turning more aggressive, and that may cause more unstable market conditions ahead.

In terms of trade recommendations, we stay long XAU/CHF. In that respect, it must still be noted that the SNB's aggressive monetary policy stance is keeping the franc's safe haven appeal low. The central bank meets this week and we expect them to reaffirm that a policy mix consisting of negative interest rates and FX intervention stays intact".

Copyright © 2016 Credit Agricole CIB, eFXnews™

(raw materials / closing price /% change)

Oil 46.06 -0.50%

Gold 1,331.10 +0.41%