Gold dips as solid U.S. economic data lifts dollar

September 02, 2020, 10.37 AM | Source: Reuters
Gold dips as solid U.S. economic data lifts dollar

ILUSTRASI. a 1kg gold bar


GOLD - TOKYO. Gold prices slipped on Wednesday as the dollar rebounded after robust U.S. manufacturing data bolstered hopes around global economic recovery, tempering the safe-haven bullion's allure.

Spot gold fell 0.3% to $1,964.75 per ounce by 0251 GMT, after hitting its highest since Aug. 19 at $1,991.91 on Tuesday. U.S. gold futures dropped 0.4% to $1,971.80.

"A strong greenback is weighing on the precious metal," said DailyFx strategist Margaret Yang.

"The broader picture is still in favour of gold, as the U.S. Federal Reserve and other central banks are likely to stay accommodative for an extended period of time."

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The dollar index bounced off two-year lows after U.S. data showed manufacturing activity accelerated to a near two-year high in August. A stronger greenback makes gold expensive for holders of other currencies.

The firm manufacturing activity also boosted investors appetite for riskier assets, limiting inflows into safe-haven bullion.

However, expectations that U.S. interest rates would stay low for longer under the new monetary policy approach from the Fed put a floor under bullion prices.

Fed Governor Lael Brainard on Tuesday said the U.S. central bank would need to roll out more stimulus to fulfil its new promise of stronger job growth and higher inflation.

"With the central bank still cautious about the U.S. economic outlook, the Fed will most likely keep rates near zero for a long time," Avtar Sandu, a senior commodities manager at Phillip Futures, said in a note.

Read Also: Dollar edges higher on solid U.S. economic data

Low interest rates reduce the opportunity cost of holding non-yielding bullion, which is also viewed as a hedge against inflation and currency debasement.

Spot gold may fall to $1,938, following its failure to break a resistance at $1,996 per ounce, said Reuters technical analysts Wang Tao.

Elsewhere, silver dipped 0.2% to $28.11 per ounce, platinum eased 0.3% to $937.87, and palladium fell 0.5% to $2,260.56.

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