Gold slumps below $1,900 as U.S. dollar, yields rise

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Gold dropped more than 2% to break below the key $1,900 per ounce level on Wednesday as a resurgent dollar forced bullion investors to reassess their positions after a record-breaking price rally.

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Spot gold fell as much as 2.5% to a near three-week low of $1,863.67, resuming its free fall after a brief hiatus in early trade. It was down 1.6% to $1,881.55 by 0540 GMT, extending losses after a 6% plunge on Tuesday.

U.S. gold futures slid 2.8% to $1,892.

Prices of silver tumbled 3.3% to $23.96 per ounce after slumping 15% in the previous session.

“It looks like some of the euphoria is coming out of the gold market,” with a test of support around $1,800 now looking possible, IG Markets analyst Kyle Rodda said.

“A lot hinges on U.S. yields and the factors driving them at the moment. Also, dollar’s strength will be something very important to watch over the next few days and weeks.”

A jump in U.S. Treasury yields helped the dollar extend its winning streak, making gold more expensive for those holding other currencies. Higher yields also increase the opportunity cost of holding non-yielding gold. [USD/] [US/]

Gold suffered its biggest one-day drop in more than seven years on Tuesday as equities surged and the dollar firmed. However, growing uncertainty about a U.S. stimulus deal weighed on Asian stocks on Wednesday.

Bullion’s gains for the year now stood at about 25%, as investors buy the metal as a hedge against a coronavirus-driven slowdown and fears of currency debasement as central banks flood the economy with money to ease the blow.

With central bank policies likely to remain “loose for the foreseeable future,” gold could move back towards $2,000, said ING analyst Warren Patterson.

Platinum eased 0.3% to $927.60, while palladium rose 1.1% to $2,113.49.

Naija247news
Naija247newshttps://www.naija247news.com/
Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

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