The prices of gold fell again on Monday after hitting a one-week low last Friday. The yellow metal went down as the U.S. dollar held firm and the Food and Drug Administration authorized the use of blood plasma from recovered patients as a treatment option for COVID-19. The positive news boosted investors’ risk sentiments and also lifted Asian stocks, which also affected gold pricing.
The dollar index climbed to more than a week high last session and continued today on an upward trend against a basket of rival currencies.
Spot gold is currently trading at $1,947.10 per ounce as of 0819 GMT.
The FDA made the so-called “emergency use authorization” after some pressure from President Donald Trump who blamed the agency for impeding the rollout of COVID-19 therapeutics and vaccines for political reasons. The agency said early evidence indicates that the use of blood plasma from recovered patients is a safe approach and can reduce mortality. Around 70,000 patients have so far been treated using blood plasma.
AxiCorp’s chief market strategist Stephen Innes said the positive news about COVID-19 treatment lifted equities and other high-risk assets, which is bad news for gold. But he also noted that the bullion was already in consolidation ahead of U.S. Federal Reserve Chairman Jerome Powell’s speech at Jackson Hole, Wyoming. Investors will be looking for hints from Powell’s annual remarks on how the Feds will manage the expected long-term recovery of the U.S. economy from the pandemic.
Phillip Futures’ senior commodities manager Avtar Sandu added that the Feds should reaffirm its pledge to keep ultra-low interest rates that would be supportive of gold. Low interest rates negatively impact the U.S. Treasury yields and the dollar and raise the demand for no-yielding assets such as gold.
In physical trading, Indian gold dealers last week offered huge discounts because of weak demand and more inflow of the precious metal from the United Arab Emirates.
In a related development, the U.S. Commodity Futures Trading Commission reported that market speculators raised their bullish stance in COMEX gold contracts for the week that ended on August 18.