Gold falls below $2,000 as dollar steadies

Bengaluru — Gold fell below $2,000/oz on Wednesday after rising sharply in the previous session as the dollar steadied, while investors awaited minutes from the US Federal Reserve’s last policy meeting.

Spot gold was down 0.4% at $1,993.68/oz by 2.53am GMT, after hitting a one-week high of $2,014.97 on Tuesday. US gold futures fell 0.5% to $2,002.50.

“Gold is down as the US dollar strengthened slightly this morning. In the short term, a rebound in the dollar might inhibit the rally in gold,” said DailyFx strategist Margaret Yang. “Gold has registered a 3% gain over the past two days, rendering the metal prices vulnerable to profit-taking activities.”

The dollar index steadied after hitting a more than two-year low in the last session. A stronger greenback makes gold expensive for holders of other currencies. The dollar, also considered a safe-haven, has lost its appeal recently after the US central bank rolled out a wave of fiscal measures and cut interest rates to near zero to mitigate economic damage caused by the coronavirus outbreak.

“Given the ferocity of the US dollar sell-off, gold should find plenty of eager buyers on any dips to $1,990 during the session,” said Jeffrey Halley, a senior market analyst at Oanda.

Markets are looking to the release of the Fed minutes at 6pm GMT.

“Although the Fed is not expected to indicate any new monetary stimulus initiatives in the minutes, investors would be paying attention to any change to Fed’s approach to inflation that could be negative for the dollar,” Phillip Futures analysts said in a note.

Meanwhile, strong corporate earnings and better-than-expected US economic data lifted risk sentiment among investors.

Elsewhere, silver eased 0.3% to $27.58/oz. Platinum dropped 0.5% to $950.63, and palladium slipped 0.7% to $2,173.62. 

Reuters