Gold beats a retreat from record peak as dollar bounces
- Spot gold fell 0.7pc to $1,929.35 per ounce by 1000 GMT, retreating from a record $1,980.57 hit earlier, as traders took profits.
Gold fell as much as 1.8pc on Tuesday from an all-time peak as the dollar rebounded and investors squared positions after a rapid rally, while silver fell more than 9pc, with the focus turning to the US Federal Reserve policy stance.
Spot gold fell 0.7pc to $1,929.35 per ounce by 1000 GMT, retreating from a record $1,980.57 hit earlier, as traders took profits.
US gold futures slipped 0.3pc to $1,924.40.
Silver also retreated after rising 6.4pc to $26.19 per ounce. It was last down 3.4pc at $23.78.
"Gold was way overbought and needed to correct," said StoneX analyst Rhona O'Connell.
"But at the moment everything is supportive; negative interest rates, intensifying geopolitical tensions and massive uncertainty surrounding the economic and financial fallout from the virus."
The dollar index bounced off a two-year low as selling eased ahead of the Fed meeting and on hopes that a massive US fiscal package would be approved.
The Fed, which begins a two-day meeting on Tuesday, is widely expected to reiterate its accommodative policy stance.
The dollar's slight recovery also pushed gold lower, said ActivTrades chief analyst Carlo Alberto De Casa.
"I expect a consolidation phase between $1,850 and $1,950-$1,960 as the rally was a bit too quick."
The volatility of precious markets prompted the Shanghai Gold Exchange to say it would take risk control measures.
"Periods of consolidation should be healthy, and long-term investors are likely to take advantage of dips to build positions," UBS said in a note, raising its 2020 average gold forecast to $1,740 from $1,650.
Safe-haven gold has rallied about 27pc so far this year, mainly supported by growing doubts over an economic recovery from the pandemic and Sino-US tensions.
Non-yielding bullion also benefited from a resultant low interest rate environment and massive stimulus since it's considered a hedge against inflation and currency debasement.
Platinum lost 3pc to $916.85 and palladium dropped 2.1pc to $2,260.96.
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