Gold prices decline amid rising US dollar, Fed cut talks

Gold prices fell on Thursday as a stronger dollar and rates on imminent tightening by the US Federal Reserve weighed on sentiment, although losses for the safe-haven metal were limited by concerns that rising COVID-19 cases would slow global growth.

 

Spot gold fell 0.5% to $ 1,778.65 an ounce by 2:21 pm ET. US gold futures are down 0.1% to $ 1,783.1

 

Putting pressure on gold, the US dollar surged to nine-month highs after July Fed minutes showed that officials largely expected they would be able to ease stimulus this year, although consensus on other key issues seemed elusive.

 

"The only thing that is unclear is when this (cut) might happen. However, the cut has become the price of gold again," said Commerzbank analyst Daniel Breesemann.

 

Earlier data showed that the number of Americans filing new jobless claims fell to a 17-month low last week, underlining recent Fed officials' views of a labor market recovery.

 

Market attention is currently focused on the annual meeting of central bankers in Jackson Hole, Wyoming on August 26-28.

 

Talk of narrowing and fears of rising delta COVID-19 cases have heightened risk sentiment in broader financial markets, pushing investors towards safe haven assets.

 

“Gold certainly benefits from its safe haven status. While stock markets are dropping hard, gold is in demand again. Obviously, COVID's nerves are on edge, ”said OANDA analyst Craig Earlam.

 

"Going above $ 1,800 looks more achievable," added Earlam. "Gold will be under downward pressure in the medium term, but that won't stop it from taking advantage of the nervousness."

 

Gold prices are up about 6% from the more than four-month low of $ 1,684.37 hit last week.

 

Elsewhere, silver fell 1.4% to $ 23.15 an ounce.

 

Platinum fell 2.5% to $ 969.88 an ounce and palladium fell 4.8% to $ 2311.19 an ounce, hitting its lowest level since mid-March at $ 2299.57.