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Jun 05, 2020 PRINT EDITION
Markets

Gold drops 1pc on stronger dollar, hopes of economic recovery

 The dollar index, comparing the greenback against a basket of rivals, rose 0.4pc, making gold more expensive for ho
May 21, 2020
  • The dollar index, comparing the greenback against a basket of rivals, rose 0.4pc, making gold more expensive for holders of other currencies.
  • Gold prices climbed to their highest since October 2012 at $1,764.55 earlier this week, mainly driven by recession fears.
  • The devastating impact of the coronavirus pandemic on the euro zone economy abated a little this month as some governments eased lockdowns.

Gold slipped 1pc on Thursday, drifting away from a 7-1/2 year peak, as the dollar strengthened and hopes of a quick economic recovery dented bullion's safe-haven appeal.

Spot gold was down 1pc  at $1,732.43 per ounce at 0930 GMT. U.S. gold futures fell 1.1pc  to $1,733.60 per ounce.

The dollar index, comparing the greenback against a basket of rivals, rose 0.4pc, making gold more expensive for holders of other currencies.

"Gold seems to have lost a little momentum since breaking above $1,750 and the rise in the dollar today doesn't seem to be helping," OANDA analyst Craig Erlam said.

"However, the enormous amount of monetary stimulus in the system, the need for that to continue for some time and the inflation risk are all bullish for gold in the longer term."

Gold prices climbed to their highest since October 2012 at $1,764.55 earlier this week, mainly driven by recession fears, U.S.-China tensions and massive monetary and fiscal stimulus.

U.S. Federal Reserve policymakers acknowledged the possibility of further support measures if the economic downturn persists, the minutes from their latest policy meeting showed.

Focus now shifts to initial U.S. jobless claims data due later in the day for further clues about the health of the world's top economy.

The devastating impact of the coronavirus pandemic on the euro zone economy abated a little this month as some governments eased lockdowns, a survey showed.

"The yellow metal remains locked within a $40 range ($1,760 - $1,720) and should continue to find solid interest toward the lower end over the near term," MKS PAMP said in a note.

Among other precious metals, palladium dropped 3.3pc to $2,032.02 an ounce, after hitting a one-month high on Wednesday. Platinum shed 1.7pc  to $836.03.

Silver dipped 1.7pc  to $17.21 an ounce.