September 08, 2020
Gold eases on firmer dollar; focus shifts to central banks
(Reuters) - Gold slipped on Tuesday due to a stronger dollar, although losses were limited by doubts over a global economic recovery and as investors awaited policy strategies from central banks in North America and Europe.
Spot gold fell 0.2% to $1,925.38 per ounce by 0510 GMT. U.S. gold futures slipped 0.1% to $1,931.70.
The dollar rose against its rivals, making gold more expensive for holders of other currencies.
“There is a bit of downside risk for USD denominated gold prices heading into this week’s central bank meetings,” said IG Markets analyst Kyle Rodda.
“If it’s perceived they’re (European Central Bank) jaw boning the currency, that could lead to another short-term lift in the USD and drag-on gold prices.”
Limiting gold’s losses was data showing Japan’s economy shrank more than initially estimated in the second quarter as capital expenditure took a hit from the pandemic.
Governments and major central banks have flooded the markets with unprecedented stimulus measures to mitigate the economic damage caused by the coronavirus, driving gold to new highs because of its role as a hedge against inflation and currency debasement.
Market participants’ focus will now be on Bank of Canada’s policy meeting on Wednesday, followed by the European Central Bank’s policy decision on Thursday. The two-day U.S. Federal Reserve meeting is scheduled next week.
On the trade front, President Donald Trump on Monday again raised the idea of decoupling the U.S. economy from China, suggesting the United States would not lose money if the world’s two biggest economies no longer did business.
Spot gold is poised to break a support at $1,923 per ounce and fall into $1,880-$1,906 range, said Reuters technical analyst Wang Tao.
Elsewhere, silver fell 0.9% to $26.76 per ounce and platinum eased 0.1% to $906.76, while palladium climbed 0.7% to $2,310.41.