The bullion falls before closing the week. The US dollar gains an advance after experiencing a sharp drop against the euro in previous session.
Since mid-May, the reserve currency records its best week following the European Central Bank’s neutral stance in the latest reports.
The gold and silver prices tumbled along with the firming greenback.
Spot gold traded at $1,938.53 per ounce, translating to a 0.8% fall. The bullion hit its best level since September 2, yesterday after trading at $1,965.94. To apply relief to the burned area, gold has gained 0.5% so far in the week.
Similarly, gold futures dropped with the same percentage, now playing at $1,948 per ounce.
On the other hand, silver recorded a much painful blow at 1.2% to $26.61 per ounce.
Other precious metals also experienced successive setbacks, with palladium easing 0.7% to $2,278.86.
Consequently, platinum shelled off 0.4% to $922.43 but heading to close the week on a 3% increase from previous highs recorded last August 7.
Analysts say that gold price will remain bullish in the medium to long term outlook, despite recent downs.
The dovish monetary policy supported by uncertainty imposed by the growing number of cases will cushion the slip.
In recent reports on US weekly jobless claims, the unemployed population remains at high levels. This suggests a slower-than-expected labor market recovery in the United States.
So far in the year, the gold price climbed 28%, with the world’s biggest economies pumping cash into the system to cushion the bleeding economy.
Firming US Dollar Brings Bad News to Metals
Central banks decided to keep interests to nearly zero to mitigate inflation. However, the Federal Reserve decided to shift to a new policy strategy, which will be more tolerant of inflation.
So far, after its application, economists said that the new mechanism has no impact on the economy.
Gold remains on the disadvantaged position after being snubbed from the $1,950 resistance level for the second straight day.
However, this red trading will not be sustained for long as socioeconomic factors continue to weigh on the dollar.
Biggest pullers include the usual tensions involving geopolitical risks such as the smoldering US-China trade and tech war, Brexit uncertainties, and the US fiscal deadlock on the next stimulus bill.
In the recent session, the Senate blocked the Republican’s coronavirus relief bill, leaving the two parties in an impasse towards a new economic stimulus. The GOP’s proposal is 60 votes short towards advance.
Along with wavering bullion, copper prices dropped to a first week low in nearly five weeks of trading in the London Metal Exchange.
The three-month copper futures in the LME fell at a significant percentage of 1.2% to $6,589 per tonne. The contract lost a total of 0.5% for the week.
Investors hope for increased demand in the world’s top metal importer as infrastructure building in China remains robust.
In a forecast, a research conducted by Antaike stated that China’s refined copper imports would rise for the second time in the year, while copper scrap imports will fall as much as 50% by the end of 2020.