Gold dips as dollar becomes preferred safe-haven

New York (Jan 28) - Gold eased on Thursday as investors opted

for the relative shelter of the U.S. dollar from waning risk-on

sentiment and after the U.S. Federal Reserve expressed worries

over the slow pace of economic recovery.

Spot gold was down 0.2% at $1,840 an ounce by 1258

GMT. Prices had fallen to their lowest since Jan. 18 at

$1,830.80 on Wednesday. U.S. gold futures shed 0.3% to

$1,838.60.

"The (Fed) meeting yesterday had no positive impact on gold

because, before and after the meeting, the dollar strengthened

as it was sought after as a safe-haven due to other concerns in

financial markets and that weighed on gold prices," said

Commerzbank analyst Daniel Briesemann.

The Fed said the pace of the recovery in U.S. economic

activity and employment had moderated in recent months, but kept

its key interest rates and monthly bond purchases

unchanged.           

    The dollar hovered near a one-week high hit in the

previous session after a sharp sell-off on Wall Street on

Wednesday and with European equities hitting one-month lows in

early Thursday trade.                  

"If you have a sharp decline in equities, you'd expect gold

to come down with it...meaning that quite often people who are

looking at the possibility of margin calls raise cash by selling

their gold holdings," said StoneX analyst Rhona O'Connell.

The delay in a $1.9 trillion U.S. coronavirus stimulus deal,

which has not received a green signal from Republicans, weighed

further on gold.            

"Maybe (market players) are waiting a little bit longer to

see if gold can regain the 200-day moving average or, if it'll

fall further to $1,800, which should be quite an attractive

buying opportunity," added Commerzbank's Briesemann.

Silver was up 0.1% to $25.26 an ounce, while platinum

edged down 0.1% to $1,064.39.

Palladium fell 0.2% to $2,300.04 after touching its

lowest since Dec. 21 earlier in the session.

Reuters