Gold prices fell by more than 1% Wednesday as the U.S. dollar strengthened and the reopening of some economies around the world reduced the need for safe haven bullion.
“Gold prices just can’t shake off reopening momentum,” said Edward Moya, senior market analyst at Oanda. Some U.S. states are easing measures that were put in place to stem the spread of the coronavirus pandemic. “Despite expectations that COVID-19 deaths could rise to 3,000 a day next month, investors are staying optimistic as new cases are not spiking,” said Moya, in a market update.
“The virus, however, will take longer to spread deep into rural corners of the country,” he said. Against that backdrop, “gold prices may continue to consolidate until either cases spike in the rest of the country or the scattered economic rebound disappoints.”
Moya said gold should see strong support come from the $1,650 level in the short-term and should still target $1,800 over the next couple months.
June gold
GCM20,
fell $22, or 1.3%, at $1,688.60 an ounce after it edged down by 0.2% on Tuesday.
The U.S dollar was up 0.3% against major currencies and headed up to its loftiest level in more than a week above 100, as gauged by the popular ICE U.S. Dollar Index
DXY,
Gains for the currency and a relatively steady climb in equity markets amid the COVID-19 pandemic has kept gold in a trading range around $1,700 an ounce.
Assets traded in dollars, like gold, often move inversely with the currency, as a stronger buck can make assets priced in the monetary unit more expensive to buyers using other currencies.
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‘Investors are overall showing cautious tendencies towards global markets and the same can be said for gold.’
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Overall, “gold continues to trade in very narrow ranges compared to just a few weeks ago, suggesting that the precious metal is awaiting its next trigger in volatility,” said Jameel Ahmad, global head of currency strategy and market research at FXTM. “Investors are overall showing cautious tendencies towards global markets and the same can be said for gold.”
“There is still hope for gold prices to push beyond the seven-year highs that it has already met this year, and many look at the economic challenges that will remain long after the coronavirus pandemic is over with as an opportunity for additional gold demand,” he told MarketWatch.
Gold fell further even as investors digested a private-sector employment report from payment processor Automatic Data Processing Inc.
ADP,
Wednesday, showing 20.2 million jobs were lost in April, as many businesses were forced to shutter in much of the U.S. to slow the spread of the coronavirus, according ADP.
Meanwhile, July silver
SIN20,
fell 4 cents, or 0.3%, at $15.07 an ounce, after it rose 2.1% on Tuesday.
July copper
HGN20,
traded at $2.348 a pound, up 0.7%. July platinum
PLN20,
shed 2.4% to $765.90 an ounce, but June palladium
PAM20,
added 0.5% to $1,765.80 an ounce.
Source : MTV
