Gold Struggles for Traction as Dollar Holds Firm

Gold Struggles for Traction as Dollar Holds Firm

Gold struggled to pick up footing on Wednesday and was stuck below the key $1,900/ounce psychological level, as absence of an agreement to extra U.S. financial improvement helped the dollar remain firm.

Gold struggled to pick up footing on Wednesday and was stuck below the key $1,900/ounce psychological level, as absence of an agreement to extra U.S. financial improvement helped the dollar remain firm. 


Spot gold was steady at $1,895.04 per ounce by 0316 GMT, after declining 1.6% in the past meeting. U.S. gold futures were additionally unaltered at $1,898.30. 


"We saw a strong rise in the dollar and that seems to be the main catalyst (for gold)," said DailyFx currency specialist Ilya Spivak, including that some optimism over another U.S. stimulus package had likewise begun to blur.


The dollar index held on to gains after bobbing off a three-week low on Tuesday, likewise helped by renewed inquiries over a COVID-19 immunization. Meanwhile, Asian stocks fell. 


Hopes for the passage of a new Covid19 relief package faded as U.S. House Speaker Nancy Pelosi dismissed a $1.8 trillion alleviation proposition from the White House, saying it "falls significantly short of what this pandemic and deep recession demands." 


Also weighing on gold's allure was the International Monetary Fund's explanation that forecasts for the global economy were "somewhat less dire" as wealthy countries and China bounced back more rapidly than anticipated from coronavirus lockdowns. 


"The report had led analysts to believe that less stimulus rather than more would be needed to pull out of the recession caused by the pandemic," Avtar Sandu, a senior commodities manager at Phillip Futures, said in a note. 


Gold, looked upon as a hedge against inflation and currency debasement, has increased 25% this year, boosted by massive improvement estimates revealed globally to cushion the economic fallout from the pandemic.


Silver fell 0.1% to $24.14 per ounce, while platinum rose 0.8% to $871.82. Palladium increased 0.6% to $2,329.45.



Economic Calendar Highlights


  • U.S. Producer Price Index (PPI) MoM: 10:00am

The Producer Price Index (PPI) measures the change in the price of goods sold by manufacturers. It is a leading indicator of consumer price inflation, which accounts for the majority of overall inflation.


A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.



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