The prices of gold recovered yesterday and hit a one-week high of $2,014.97 an ounce but again fell below $2,000 per ounce on Wednesday as the U.S. dollar steadied ahead of the release of the minutes of the July 28-29 policy meeting of the Federal Open Market Committee.
Spot gold is currently trading at $1,993.55 per ounce as of 0917 GMT.
The greenback gained 0.1% against a basket of rival currencies after tumbling to a more than two-year low yesterday. A firmer dollar makes the bullion more expensive for investors using other currencies. A rival safe-haven of gold, the dollar recently lost its appeal after the Federal Reserve lowered interest rates to near-zero and launched a series of stimulus measures to cushion the economy from the impact of the COVID-19 pandemic.
Another factor that weighs on gold is the better-than-expected economic data and strong corporate earnings that lifted investors’ risk sentiment.
DailyFx’s strategist Margaret Yang commented that the strengthening of the dollar inhibited gold’s rally. The precious metal posted a 3% gain in just two days suggesting its vulnerability to the profit-taking activities of investors. OANDA’s senior market analyst Jeffrey Halley added that the metal is likely to find many buyers if it goes below the $1,990 level today because of the aggressive sell-off of the U.S. dollar.
Meanwhile, the market is waiting for the release of the Fed’s policy meeting due today at 1800 GMT. The Fed is not expected to announce new economic stimulus in the minutes. But analysts at Phillip Futures noted that investors and traders would be focusing on any change in the central bank’s approach to managing inflation that could affect the strength of the dollar.
On the technical front, Reuters’ analyst Wang Tao predicts that after the failure of spot gold to break a resistance price level at $2,014 per ounce, it may test support price at $1,978 an ounce.