Gold prices are closely tracking movements in the dollar, say analysts
Gold edged higher on Tuesday as the dollar dipped, with investors awaiting Federal Reserve Chairman Jerome Powell’s speech later this week, while a rally in equity markets limited bullion’s advance. Spot gold was up 0.2 per cent at $1,935.88 per ounce by 0335 GMT (9:05 am in India). US gold futures gained 0.1 per cent at $1,941.60 per ounce.
On Thursday, Mr Powell is due to talk at a gathering of central bankers in Jackson Hole, Wyoming, where he is expected to provide further clarity into the US central bank’s efforts to revamp its approach to monetary policy.
“There is lot of focus on Jackson Hole symposium and Powell’s speech. I think the markets are reluctant to commit to a direction until that happens,” said DailyFx currency strategist Ilya Spivak, adding that gold prices are closely tracking movements in the dollar.
“We have seen a pullback in gold since beginning of the month around the sense that may be the Fed is not going to do much in terms of expanding its policy tool kit.”
The central bank has rolled out a wave of fiscal and monetary stimulus measures and cut interest rates to near zero to combat the economic toll caused by the pandemic, helping gold climb nearly 28 per cent this year.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies
The dollar index fell 0.1 per cent against its rivals on Tuesday.
Limiting gold’s appeal, Asian stock markets rose as investors cheered signs of progress in US-China trade negotiations and following a fresh Wall Street rally.
On the technical side, spot gold may test a support at $1,911 per ounce, as suggested by its wave pattern and a projection analysis, said Reuters technical analyst Wang Tao.
Elsewhere, silver gained 0.6 per cent to $26.71 per ounce, platinum rose 1.2 per cent to $926.32, and palladium climbed 0.9 per cent to $2,180.47.
