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Gold Market Overview - Dec 6 2016

The global economy is gaining momentum, but gold remains weak. The spot price hovers around $1,180 per ounce.

The United States Federal Reserve is expected to increase rates to a maximum of 0.75 percent - up from 0.25 percent. Unlike previous rate hike expectations, the market welcomes this news without panic. The S&P500 moves towards alltime highs.

In Europe, the Italian referendum vote is a decisive 'no' and Renzi, the prime minister of Italy, has pledged to resign. The door is open for right-wing groups to gain greater power in the government. It is unclear what affect these developments will have on gold and the Italian banks over the long term.

The Asian Gold Market

In China, the government is fighting against capital flight out of the country by restricting gold importation and other currencies. Investors are dumping the yuan because of ongoing weakness in the currency - this weakness is partly due to the election of Donald Trump and his protectionist rhetoric on trade.

It is the same story in India. Despite a brief boost to premiums following the Indian government’s decision to ban high-denomination notes, the lack of cash as led to one of the weakest Indian wedding seasons in recent memory. Demand is down significantly.