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A box of 1kg gold bars. Picture: BLOOMBERG/WEI LENG TAY
A box of 1kg gold bars. Picture: BLOOMBERG/WEI LENG TAY

Bengaluru — Gold prices fell on Wednesday as an uptick in the dollar and buoyant risk appetite dimmed the safe-haven metal’s appeal, while investors awaited Federal Reserve chair Jerome Powell’s speech this week for guidance on the central bank’s taper plans.

Spot gold slid 0.5% to $1,793.59/oz by 3.48am GMT, while US gold futures dipped 0.7% to $1,795.90.

The dollar index inched 0.1% higher, denting gold’s appeal for those holding other currencies, while Asian shares held onto their recent gains.

“The higher equity markets, the risk-on narrative ... really diminishing the need for gold as a hedge,” said Stephen Innes, managing partner at SPI Asset Management.

The coronavirus curve in some hotspots is easing and the US Food and Drug Administration’s approval of vaccinations should also bring down the curve, Innes said.

The US drug regulator granted full approval on Monday to the Pfizer/BioNTech Covid-19 vaccine, raising the hope inoculations could accelerate.

Risk sentiment was also underpinned by remarks from top US infectious disease expert Dr Anthony Fauci that the nation could get Covid-19 under control by early next year if vaccinations ramp up.

Investors now await Powell’s speech at the Fed’s annual economic symposium at Jackson Hole, Wyoming, on August 27 to see if he gives a timeline on the stimulus withdrawal.

The Fed is likely to “talk about the concept of tapering, but they won’t give a timeline”, IG Market analyst Kyle Rodda said.

“Everyone is willing to take a punt that they’re going to maybe take a softer stance to tapering this weekend and it’s a good thing for gold.”

Gold is considered a hedge against inflation and currency debasement likely to result from widespread stimulus measures.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.2% to 1,004.63 tonnes on Tuesday from 1,006.66 tonnes on Monday.

Silver fell 0.7% to $23.66/oz, while platinum dropped 1.2% to $999.61. Palladium was down 1.7% at $2,431.81.



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