Economy

Gold loses sheen as robust dollar weighs

By Eileen Soreng

(Reuters) – Gold prices eased for a third straight session on Wednesday as the dollar climbed to a near two-month high, though uncertainties surrounding global economic recovery limited the bullion’s decline.

Spot gold fell 0.2% to $1,894.69 per ounce by 348 GMT.

U.S. gold futures were down 0.5% to $1,898.

“We are seeing a risk-off environment taking hold, which means that the dollar continues strengthening and there is a lot of pressure on gold prices in the near-term,” said Howie Lee, economist at OCBC Bank.

But, “in the longer term, fundamentally we still see appeal for gold,” Lee added.

The dollar index, often seen as a rival safe-haven, hit an eight-week peak helped by positive U.S. economic data and concerns about a second wave of coronavirus infections in Europe and Britain.

A firmer dollar makes bullion more expensive for holders of other currencies.

Investors were also wary of mixed signals from Chicago Federal Reserve President Charles Evans, who on Tuesday said the U.S. economy risks a longer, slower recovery and “recessionary dynamics” if Congress fails to pass an additional fiscal stimulus package.

It is possible for the Fed to raise interest rates before inflation starts to average 2%, Evans added.

Meanwhile, U.S. economic policymakers opened the door to further aid for small businesses hit by the coronavirus but provided no quick path.

“The money printing that you’re seeing in the west is going to support U.S. dollar gold prices,” said Perth Mint’s CEO Richard Hayes.

The rising virus caseload and the possibility of whether a vaccine is discovered or not will be fundamental to gold in the short to medium term, he added.

On investors radar was also renewed U.S.-China tensions with President Donald Trump telling the United Nations General Assembly that China must be held accountable for the COVID-19 outbreak.

Silver fell 1.5% to $24.05 per ounce, platinum rose 0.4% to $869.91 and palladium eased 0.3% to $2,215.24.

(Reporting by Eileen Soreng in Bengaluru; Editing by Rashmi Aich and Sherry Jacob-Phillips)

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