NEW YORK: Gold prices slumped more than 2% on Wednesday to the lowest level in over two months as the dollar advanced, with investors awaiting further response from major central banks at a time of economic uncertainty.
Spot gold dipped 1.9% to $1,862.56 per ounce by 1:57 p.m. EDT (1757 GMT), having hit its lowest since July 22 at $1,861.60. US gold futures settled down 2.1% at 1,868.40 per ounce.
“Gold is currently taking its cue from the dollar ... and the dollar strength continues to weigh on gold,” said Standard Chartered analyst Suki Cooper.
“We could see a retest of the lows from early August, the next technical support level thereafter is around $1,840 per ounce, however prices are closing in on oversold territory.”
The dollar index hit an eight-week high, dimming the appeal of bullion to holders of other currencies.
Gold prices declined, despite US stocks retreating after data showed US business activity nudged down in September.
“Long-term uncertainties are still looming and no investor would lose the opportunity of adding gold to their portfolio when prices are low,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
“Investors are waiting and watching what the major central banks will do next. At this moment most of the monetary and fiscal policies available have already been implemented.”
Policymakers “are not even going to begin thinking” about raising interest rates until inflation hits 2%, Federal Reserve Vice Chair Richard Clarida said on Wednesday.
Meanwhile, Cleveland Fed President Loretta Mester said monetary policy will need to remain accommodative for the next several years and more fiscal stimulus is needed to support the economy.
Widespread stimulus measures have bolstered gold’s appeal as a hedge against inflation risk and currency weakening. Silver slid 6.2% to $22.91, having hit a near two-month low of $22.81 earlier in the session.
Platinum shed 3.1% to $839.88 per ounce, earlier touching its lowest since July 20 at $836.50, and palladium rose 0.5% to $2,232.07.
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