US Markets

Gold hits 6-week trough as dollar grinds higher

Credit: REUTERS/BAZ RATNER

Gold dropped to a six-week low on Wednesday as the dollar held onto its recent rally, while a lack of additional stimulus to aid the recovery of the coronavirus-battered global economy further weighed on sentiment.

* Silver falls as much as 5.6% to a two-month low

* Platinum touches 2 month-low

* Break-back above $1,900 should be difficult for gold -analyst

* Interactive graphic tracking global spread of coronavirus: https://graphics.reuters.com/world-coronavirus-tracker-and-maps/ (Adds comments, updates prices)

By Nakul Iyer

Sept 23 (Reuters) - Gold dropped to a six-week low on Wednesday as the dollar held onto its recent rally, while a lack of additional stimulus to aid the recovery of the coronavirus-battered global economy further weighed on sentiment.

Spot gold fell 0.8% to $1,884.51 per ounce by 1157 GMT, after earlier dropping 1.4% to touch its lowest since Aug. 12 at $1,873.01. U.S. gold futures were down 0.9% to $1,891.30 per ounce.

"As long as we see strength in the dollar, undoubtedly we are also going to see gold struggle," said Saxo Bank analyst Ole Hansen, adding that the break below $1,900 sparked some nervousness and short-selling in the market.

The dollar index hit an eight-week high, dimming the appeal of bullion to holders of other currencies.

"I think gold has entered a corrective phase...A break-back above $1,900 should be difficult given how long its taken to break and hold below here," said OANDA analyst Craig Erlam.

But even if it does, the near-term outlook isn't good for gold with a stronger dollar weighing on the outlook and a lot of the bullish factors already priced in, he added.

Comments from Chicago U.S. Federal Reserve President Charles Evans, who said interest rates could be raised before inflation averages 2%, also weighed on sentiment by weakening inflation expectations and lifting U.S. real yields. [MKTS/GLOB]

Gold has turned "passive", having priced all of the favourable factors already and now needs inflation to emerge and a weaker dollar to attract renewed demand, said Saxo Bank's Hansen.

Non-yielding gold is often seen as a hedge against inflation and currency weakening.

Silver fell 4.1% to $23.41 per ounce, having hit a nearly two-month low of $23.04 earlier in the session.

Platinum shed 0.7% to $861.08 per ounce, earlier touching its lowest since July 21 at $845.50, and palladium was little changed at $2,220.57. (Reporting by Nakul Iyer in Bengaluru, Editing by Tomasz Janowski/Mark Heinrich) ((nakul.iyer@thomsonreuters.com; Within U.S. +1 646 223 8780, Outside U.S. +91 80 6749 0417; Reuters Messaging: nakul.iyer.thomsonreuters.com@reuters.net)) Keywords: GLOBAL PRECIOUS/ (UPDATE 5, PIX)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More