July 28, 2020
Gold pares gains from record rally as dollar slide pauses
(Reuters) - Gold pared gains on Tuesday after a record run as the dollar regained some ground, although U.S.-China tension and bets for the U.S. Federal Reserve to reiterate a dovish policy stance underpinned the metal's safe-haven appeal.
Spot gold was up 0.1% at $1,943.14, but off its peak of $1,980.57 per ounce, with the dip also
attributed to profit-taking.
U.S. gold futures rose 0.2% to $1,934.90.
Silver also trimmed gains and was up 0.7%, after rising as much as 6.4% to $26.19 per ounce.
"A slight reversal in the dollar could have triggered nervous longs to bail out, but there's been no change in the fundamentals whatsoever," said Michael McCarthy, chief strategist at CMC Markets.
"We've had a very steep rise over the previous eight sessions from $1,800 to all the way up to $1,980, and such a rise in any market in such a short period of time does make it vulnerable to pullback."
The dollar index crept higher after slumping to a two-year low, with markets awaiting the passage of a new fiscal rescue package.
Traders also took stock of data showing gold consumption from traditional top buyer China fell 38.25% in the first half on the year.
The focus now shifts to the Fed's two-day meeting that ends on Wednesday.
"(This meeting) is expected to discuss implementing dovish forward guidance which gold investors would consider supportive as real yields, the key driver of gold, would be expected to remain at record lows," Phillip Futures analysts said in a note.
Lower bond yields reduce the opportunity cost of holding non-interest bearing gold.
Gold's safe-haven appeal was also supported by deteriorating US-China ties and dimming hopes of a quick economic recovery as the virus showed no signs of slowing.
Platinum lost 1.5% to $931.32 and palladium dropped 2.2% to $2,263.84.