Gold dips as solid US economic data lifts dollar

By: |
September 2, 2020 9:29 AM

"A strong greenback is weighing on the precious metal," said DailyFx strategist Margaret Yang."The broader picture is still in favour of gold, as the U.S. Federal Reserve and other central banks are likely to stay accommodative for an extended period of time."

Gold prices, global economic recovery, US manufacturing data, US Federal Reserve, US economic outlook, latest news on gold pricesA stronger greenback makes gold expensive for holders of other currencies. (Reuters photo)

Gold prices slipped on Wednesday as the dollar rebounded after robust U.S. manufacturing data bolstered hopes around global economic recovery, tempering the safe-haven bullion’s allure.Spot gold fell 0.3% to $1,964.75 per ounce by 0251 GMT, after hitting its highest since Aug. 19 at $1,991.91 on Tuesday. U.S. gold futures dropped 0.4% to $1,971.80.

“A strong greenback is weighing on the precious metal,” said DailyFx strategist Margaret Yang.”The broader picture is still in favour of gold, as the U.S. Federal Reserve and other central banks are likely to stay accommodative for an extended period of time.”

The dollar index bounced off two-year lows after U.S. data showed manufacturing activity accelerated to a near two-year high in August. A stronger greenback makes gold expensive for holders of other currencies.

The firm manufacturing activity also boosted investors appetite for riskier assets, limiting inflows into safe-haven bullion.

However, expectations that U.S. interest rates would stay low for longer under the new monetary policy approach from the Fed put a floor under bullion prices.

Fed Governor Lael Brainard on Tuesday said the U.S. central bank would need to roll out more stimulus to fulfil its new promise of stronger job growth and higher inflation.”With the central bank still cautious about the U.S. economic outlook, the Fed will most likely keep rates near zero for a long time,” Avtar Sandu, a senior commodities manager at Phillip Futures, said in a note.

Low interest rates reduce the opportunity cost of holding non-yielding bullion, which is also viewed as a hedge against inflation and currency debasement.Spot gold may fall to $1,938, following its failure to break a resistance at $1,996 per ounce, said Reuters technical analysts Wang Tao.

Elsewhere, silver dipped 0.2% to $28.11 per ounce, platinum eased 0.3% to $937.87, and palladium fell 0.5% to $2,260.56.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Cotton procurement in Maharashtra may begin from early November
2Govt slashes domestic natural gas price by 25 percent to $1.79/mmBtu
3Govt cuts gas price by 25% to lowest on record