Strong Dollar, Rate Hike Bets Weigh on Gold This Year, But Commodity Strategists Bullish Long Term

04:32 PM EST, 11/13/2026 (MT Newswires) -- A stronger dollar and expectations of monetary policy tightening have taken some shine off gold this year, but commodity strategists remain constructive on the yellow metal in the long run. Gold prices generally have an inverse relationship with the US dollar and interest rates. The dollar index has gained 5.2% this year, rising to its highest level since April 2025 on Thursday. Meanwhile, US inflation has remained above the Federal Reserve's 2% target for nearly six years, fueling expectations about interest rate increases. Spot gold was little changed at $3,874.43 per troy ounce in late Friday trade. The safe-haven asset reached a record high of close to $5,600 in January amid mounting geopolitical concerns at the time. RBC expects gold prices to finish 2026 at an average of $4,503 per ounce. For 2027, the brokerage tightened its outlook from its mid-to-high range to its middle scenario of $4,225. "Persistent inflation appears to be entrenching more tightening expectations in the eyes of gold investors, but still, we continue to view our low scenario, approximately $3,757 (per ounce) in (the fourth quarter) and $3,661 (per ounce) in 2027, as a meaningful floor, underpinned by sustained central bank demand, risk premiums, and investor appetite," RBC Commodity Strategist Christopher Louney said in a note to clients Friday. Markets are pricing in a roughly 88% probability that the Fed will lift rates by 25 basis points next month, according to the CME FedWatch tool. The Federal Open Market Committee held its policy rate steady in October following a quarter-percentage-point hike in September. "There is pain out there, but anecdotally, the investor sentiment remains positive on gold, even as higher interest rate expectations and broader volatility weigh on gold," Louney said. "Safe-haven appeal should help in the long run with strong investor appetite, and when combined with ongoing central bank interest, we think gold can manage gains even amid opposing forces and uncertainty." ING Bank is also constructive on gold over the longer term. "While higher rates and a stronger dollar could continue to weigh on gold in the near term, we remain constructive over the longer term, supported by central bank buying and safe-haven demand," ING Bank Commodities Strategist Ewa Manthey said in a note on Thursday. Gold typically struggles when real, or inflation-adjusted, yields rise. The 10-year real yield increased 69 basis points to 2.91% in the third quarter, its highest level since 2008, Brown Brothers Harriman said in a report at the end of September. Earlier this week, Fed Governor Christopher Waller called for further policy tightening to curb inflationary pressures, joining other central bank officials who have recently leaned hawkish.