Gold falls below $2,000 per ounce as dollar slide halts

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August 19, 2020

Gold dipped below $2,000 an ounce on Wednesday partly in response to a pause in the dollar’s slide as investors awaited more details on the U.S. Federal Reserve’s strategy to revive the pandemic-hit U.S. economy.

Spot gold fell 0.8% to $1,984.74 per ounce by 1201 GMT, having hit a one-week high of $2,014.97 on Tuesday.

U.S. gold futures were down 1.1% at $1,991.20.

The dollar was up 0.1% versus major currencies, pausing its slide that has pushed the currency to a more than two-year low on Tuesday.

While gold dipped on the steadier dollar, expectations of further dollar weakness could prompt gold to “carve out a more sustained presence above $2,000 and reach new record highs,” said FXTM market analyst Han Tan.

“The release of the latest FOMC minutes could offer another gust of wind in bullion bulls’ sails, especially if there is an obvious signal that the Fed is willing to tolerate faster U.S. inflation,” Tan added.

Minutes from the Fed’s last meeting are due at 1800 GMT, with investors looking out for any hints on further action it could take in September. But no change in policy rates is expected until end-2021.

Commerzbank analyst Daniel Briesemann attributed the latest retreat in gold to profit taking, given the gain of about $80 in bullion this week.

“In the mid to long term, the sentiment towards gold is still very upbeat because of the ultra loose monetary policy pursued by the central banks.”

Money-printing by central banks amid near-zero interest rates to ease the economic fallout from the pandemic have bolstered gold’s appeal as a hedge against inflation and currency debasement, driving its gains of more than 30% so far this year. Gold touched an all-time peak of $2,072.50 on Aug. 7.

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Elsewhere, silver was 1.4% lower at $27.28 per ounce. Platinum fell 1.7% to $940.05 and palladium was down 0.8% at $2,170.68 per ounce.

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

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Gold falls below $2,000 per ounce as dollar slide halts

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