Dollar steals gold’s sparkle
Metal slips for third consecutive session on as the greenback climbs to an almost two-month high
Bengaluru — Gold prices eased for a third consecutive session on Wednesday as the dollar climbed to a near two-month high, though uncertainty surrounding global economic recovery limited the bullion’s decline.
Spot gold fell 0.2% to $1,894.69/oz by 3.48am GMT. US gold futures were down 0.5% to $1,898.
“We are seeing a risk-off environment taking hold, which means that the dollar continues strengthening and there is a lot of pressure on gold prices in the near term,” said Howie Lee, economist at OCBC Bank.
But, “in the longer term, fundamentally we still see appeal for gold”, Lee said. The dollar index, often seen as a rival safe-haven, hit an eight-week peak helped by positive US economic data and concerns about a second wave of coronavirus infections in Europe and Britain. A firmer dollar makes bullion more expensive for holders of other currencies.
Investors were also wary of mixed signals from Chicago Federal Reserve president Charles Evans, who on Tuesday said the US economy risks a longer, slower recovery and “recessionary dynamics” if Congress fails to pass an additional fiscal stimulus package. It is possible for the Fed to raise interest rates before inflation starts to average 2%, Evans said.
Meanwhile, US economic policymakers opened the door to further aid for small businesses hit by the coronavirus but provided no quick path. “The money printing that you’re seeing in the West is going to support US dollar gold prices,” said Perth Mint CEO Richard Hayes.
The rising virus caseload and the possibility that a vaccine will be discovered will be fundamental to gold in the short to medium term, he said.
On investors radar was also renewed Us-China tension with President Donald Trump telling the UN general assembly that China must be held accountable for the Covid-19 outbreak.
Silver fell 1.5% to $24.05/oz, platinum rose 0.4% to $869.91 and palladium eased 0.3% to $2,215.24.
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