Gold Price Got Crushed Today

The price of gold plunged Tuesday, reaching its lowest level since the Brexit crisis as a bullish dollar made greenback-denominated precious metals more expensive for foreign buyers.

Gold for December delivery fell $42.20, or 3.2%, to $1,270.50 a troy ounce, its lowest settlement on the Comex division of the New York Mercantile Exchange since the June 23 Brexit vote. In percentage terms, Tuesday’s decline was the biggest since late 2013, according to MarketWatch.

Bullion has moved below a key horizontal support line, which could expose the metal to further downside risk. Immediate support for the contract is now located at $1,259.00.

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Silver prices also plunged to three-month lows, erasing all of their post-Brexit gains. The December futures price fell 1.04, or 5.5%, to $17.83 a troy ounce.

A surging US dollar was the main catalyst behind the massive decline. The dollar advanced 0.5% against a basket of other major currencies, propelled by large gains against the British pound. Sterling has been in free-fall since British Prime Minister Theresa May announced plans to begin the formal Brexit process by the end of Q1 2017. The British leader also indicated that her government will negotiate for a hard Brexit rather remain part of the single market.

The US dollar was also supported by rising rate-hike bets. By the end of day Friday, traders were pricing in a nearly 59% chance of a December liftoff, according to the 30-day Fed Fund futures prices.

On Wednesday, ADP Inc. is forecast to show the creation of 166,000 private US jobs in September. The payrolls processor reported an increase of 177,000 the previous month.

The Labour Department will release its official September nonfarm payrolls report on Friday. The report is expected to show the creation of around 170,000 nonfarm jobs. Unemployment is expected to hold steady at 4.9%.