Firm US dollar, rising stock markets and low inflation in the EU put pressure on gold

The gold price is continuing to show a tendency towards weakness and is trading this morning at only $1,110 per troy ounce. Gold in euro terms is faring somewhat better thanks to the firmer US dollar, though it nonetheless remains below the €1,000 per troy ounce mark. 

The fall in the gold price is due not only to the appreciating US currency but also to the fact that equity markets have been rising - in some cases sharply - of late. Added to this is the fact that the inflation rate in the Eurozone dipped in September to -0.1%, putting it back in negative territory for the first time since March. 

The core inflation rate (discounting energy, food and beverages) remained at 0.9%. This increases the risks of deflation, which has a negative impact on the gold price in the short term. At the same time, however, there is growing pressure on the ECB to expand its bond purchasing programme (QE), which is believed to have a positive medium-term impact on the gold price, especially on the gold price in euros, says Commerzbank.