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B.and Arundhati Sarkar
September 17 (Reuters) – Gold’s slight rebound on Friday after a sharp sell-off in the previous session lost momentum with the dollar gaining ground, setting it on course for a second weekly decline, with investors focusing on the Fed’s tapering strategy.
Spot gold XAU = fell 0.2% to $ 1,750.70 an ounce at 10:40 a.m. EDT (1440 GMT). US gold futures GCv1 fell 0.4% to $ 1,750.10.
A surprise surge in US retail sales in August earlier this week rekindled Fed fears early, boosted the dollar and caused the price of gold to decline nearly 3% on Thursday.
The market already believes the Fed will cut back bond purchases, which would drive up yields (US Treasuries), said Daniel Pavilonis, senior market strategist at RJO Futures.
“That doesn’t bode well for gold, it will most likely go down again,” said Pavilonis.
He added that the dollar, not gold, benefited from the demand for safe havens due to developments in China surrounding real estate developer Evergrande.
The dollar climbed to a three-week high, making gold more expensive for other currency holders, while benchmark government bond yields rose as well. USD /US/
“Gold has been a frustrating product most of the time, rolling back to median,” said a NY-based trader, adding that it would likely be narrowed in the $ 1,750-80 range ahead of the Fed meeting.
The Fed’s Monetary Policy Committee will meet on Tuesday and Wednesday.
A strong hawkish shift could trigger another knee-jerk downward reaction in gold even if it’s already priced in, StoneX analyst Rhona O’Connell said.
Not only does the removal of economic support tarnish gold’s safe haven status, but any subsequent rate hike would result in higher opportunity costs for holding unprofitable assets like gold bars.
silver XAG = fell 2% to $ 22.47 an ounce after hitting its lowest level in more than a month on Thursday.
platinum XPT = rose 1.3% to $ 945.33 while palladium XPD = fell 0.9% to $ 2,015.18.
(Reporting by Arundhati Sarkar and Arpan Varghese in Bengaluru; editing by Aditya Soni)
(([email protected]; twitter.com/Arundhati_05; +1 646 223 8780 ext .: 2776))
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
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