Gold price retreats more than 1% as dollar halts slide

July 30, 2020

London (July 30) - Gold fell more than 1% on Thursday as the dollar stalled its slide, with analysts saying bullion may face more resistance in its bid to breach the $2,000 level.

Spot gold was down 1% at $1,951.38 per ounce by 1014 GMT. U.S. gold futures eased 0.5% to $1,943.50.

The dollar found some support after the U.S. Federal Reserve in a policy update offered no real clues about its next moves beyond a reiteration of easy monetary stance.

Dollar bears had speculated the Fed might loosen its approach to inflation.

“Buying sentiment towards the precious metal could fall in the short term, which may trigger a technical correction over the next few days,” FXTM analyst Lukman Otunuga said, attributing gold’s slide to a “stabilizing dollar.”

Gold jumped to near a record high on Wednesday after the Fed pledged to keep interest rates near zero. But initial gains in equities led by Wall Street overnight, and now a bounce in rival safe-haven the dollar - making gold less attractive to holders of other currencies - cut short the climb.

But the non-yielding metal, which benefits from low interest rates and is considered insurance against currency debasement and high inflation, is still up over 28% this year, supported by strong investment demand from Europe and North America, which has offset weak physical consumption in top Asian hubs.

“The macro environment is still quite friendly for gold - there’s plenty of geopolitical risks and the monetary accommodation is still very significant across many central banks,” Bank of China International analyst Xiao Fu said.

“It’s just that $2,000 is very strong psychological resistance level and people are a bit nervous about gold’s valuation.”

Prices may test support at $1,943 per ounce, said Reuters technical analyst Wang Tao.

Other metals too joined the slide, with silver shedding 4.3% to $23.36 per ounce, platinum down 2.4% to $902.17 and palladium 4.3% to $2,065.63.


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