Gold price retreats as dollar gains

Reading Time: 2 minutes

Gold slipped on Thursday from a more than one-week high hit in the last session, as the dollar recovered some lost ground after doubts emerged whether an agreement on a new U.S. fiscal coronavirus aid package could be reached before the election.

Spot gold fell 0.6% to $1,913.45 per ounce by 0343 GMT, after hitting its highest level since Oct. 12 at $1,931.01 on Wednesday. U.S. gold futures were down 0.7% to $1,916.00 per ounce.

 “What we are seeing is this unwillingness to really believe (about a stimulus deal)… that’s why these moves don’t have near-term follow through,” said DailyFx currency strategist Ilya Spivak.

Stimulus talks between U.S. lawmakers faced a setback on Wednesday when President Donald Trump accused Democrats of being unwilling to craft a compromise on aid, despite reports of some progress earlier in the day.

The news dented risk sentiment and lifted the dollar against its rivals, making gold more expensive for holders of other currencies.

Underscoring the need for additional fiscal support, U.S. Federal Reserve Governor Lael Brainard said the economic recovery is uneven and uncertain and will require continued support to ensure it becomes broad-based and sustainable.

Gold tends to benefit from widespread stimulus measures from central banks as it is widely viewed as a hedge against inflation and currency debasement.

“Despite the fall in Asia, gold looks to be a buy on dips, especially as financial markets start to price in substantial risk potential over the coming two weeks,” said Jeffrey Halley, senior market analyst at OANDA. Investors now turn their attention to the final U.S. presidential debate between Trump and Democrat rival Joe Biden, and weekly U.S. jobless claims due later in the day.

Elsewhere, silver fell 1.1% to $24.79 per ounce, platinum dropped 0.2% to $884.56 and palladium was down 0.1% to $2,403.69.

Once you're here...

%d bloggers like this: