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Gold Slips on Dollar Gains, With Central Banks in Focus

Sept 7 (Reuters) - Gold eased on Monday as the dollar made gains, although economic uncertainties kept it from falling further as investors awaited developments from central banks.

Spot gold fell 0.2% to $1,928.05 per ounce by 0951 GMT. U.S. markets are shut for the Labor Day holiday, while U.S. gold futures were little changed at $1,934.90.

“A higher dollar is weighing on gold, while longer term uncertainties still persisting in the market is putting a floor under prices,” Carsten Menke, analyst at Julius Baer, said.

Menke said gold is likely to trade sideways “as recessionary fears have already been priced in and investors are now waiting to see what happens next in term of central bank policies”.

The dollar index rose 0.2% , making gold more expensive for those holding other currencies.

Global central banks have cut interest rates to tackle the coronavirus crisis, with gold gaining 27% this year as lower interest rates lower the opportunity cost of holding non-yielding bullion.

Investors now focused on the European Central Bank’s policy decision on Thursday.

“We wouldn’t be surprised to see gold bouncing off the lower end of this corridor and going higher over the next weeks, but a fall below $1,900 cannot be ruled out if there’s a chance of expectation of stronger economic data from U.S.,” Commerzbank analyst Eugen Weinberg said.

Meanwhile, coronavirus cases in the world’s second-largest bullion consumer India rose above Brazil into second place behind the United States.

“India’s gold imports last month were good and the recent price movement was not so much initiated and supported by physical demand for bars and coins but exchange-traded funds,” Weinberg added

Elsewhere, silver was steady at $26.86 per ounce, platinum rose 0.5% to $899.32 and palladium was up 0.1% at $2,299.77.

Reporting by Diptendu Lahiri and Arundhati Sarkar inBengaluru; Editing by Alexander Smith

Source: Reuters

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