Stronger US Dollar Erodes Bullion Demand

The US dollar rose 0.30% against the Euro on Tuesday as investors bet that monetary policies in the United States and the monetary union would continue to diverge. A stronger greenback puts pressure on dollar-denominated commodities as they become more expensive for investors using other currencies. Underpinning the short-term bearish sentiment, holdings in SPDR Gold Trust, the world's largest gold-backed ETF, decreased -0.14% to 844.27 tonnes on Tuesday.

XAUUSD finished the previous session at $1275.20 per troy ounce before rebounding overnight. A look at the daily price chart of gold reveals the intermediate-term trend in the metal is down, with prices stuck within a horizontal range stretching from $1260-$1280. Selling pressure could accelerate on a dip below $1270 per ounce, which coincides with the last major pivot low on the 4-hour chart.

Led by a sharp rise in auto and student loans, US consumers increased their borrowing in September by the most since November 2016 according to Tuesday’s Federal Reserve data. Consumer borrowing figures are closely tracked for clues about the general trend in consumer spending, which accounts for almost 70.00% of US economic activity.

Outstanding consumer credit grew by $20.83 billion during the month of September, climbing by an annualized pace of 6.60% on a seasonally adjusted basis. Total outstanding credit rose to a revised $13.14 billion in August, growing at a 4.20% annual clip. Economists polled by the Wall Street Journal were expecting a $19.00 billion increase in September. Non-revolving credit outstanding, which mainly includes vehicle and student loans, gained by $14.40 billion, nearly double the $7.60 billion rise recorded in August. The USDCHF pair is broadly unchanged near 0.9990 in early European trade.