Gold touches six-week low as robust dollar weighs

Gold touches six-week low as robust dollar weighs
Spot gold fell 1% to $1,880.46 per ounce by 0641 GMT. Earlier within the session, bullion hit its lowest since Aug. 12 of $1,873.70.

One kilogramm fine gold bar are pictured within the Pro Aurum KG in Munich, Germany, on Wednesday, July 10, 2019. (Photographer: Michaela Handrek-Rehle/Bloomberg)
Gold prices touched a six-week low on Wednesday, because the dollar strengthened with the coronavirus crisis rattling sentiment in Europe, while investors grew wary of further stimulus from the US Federal Reserve System .

Spot gold fell 1% to $1,880.46 per ounce by 0641 GMT. Earlier within the session, bullion hit its lowest since Aug. 12 of $1,873.70.

US gold futures were down 1.5% at $1,879.10.

The dollar index hit an eight-week peak, bolstered by upbeat US home sales data and concerns a few second wave of coronavirus infections in Europe.

A firmer dollar makes bullion costlier for holders of other currencies.

“We are seeing a risk-off environment grasping , which suggests that the dollar continues strengthening and there’s tons of pressure on gold prices within the near-term,” said Howie Lee, economist at OCBC Bank.

Also weighing on sentiment were mixed signals from Chicago Federal Reserve System President Charles Evans, who on Tuesday said the US economy risks a extended , slower recovery and “recessionary dynamics” if Congress fails to pass a further fiscal stimulus package.

It is possible for the Fed to boost interest rates before inflation starts to average 2%, Evans added.

Meanwhile, US economic policymakers opened the door to further aid for little businesses hit by the coronavirus, but provided no quick path.

“We also are seeing a small pessimism about US fiscal stimulus which has probably curbed inflation expectations just a touch bit,” said IG Markets analyst Kyle Rodda.

Gold, viewed as a hedge against inflation and currency debasement, surged about 24% this year, mainly supported by unprecedented stimulus measures by governments and central banks worldwide to revive their coronavirus-battered economies.

The market remains expecting changes in policy settings that would cause a stronger gold price overtime but that’s a longer-term view, he added.

Silver fell 4.8% to $23.25 per ounce, having hit an almost two-month low of $23.04 earlier within the session.

Platinum fell 1% to $858.47 and palladium eased 0.1% to $2,217.75.

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