Gold prices fell to hit their lowest in nearly two weeks on Tuesday, as the dollar strengthened and investors awaited a policy decision from the European Central Bank this week.
Spot gold fell 0.5% at $1,918.60 per ounce by 10:34 a.m. EDT (1434 GMT) after falling as much as 1.2% to $1,906.24. U.S. gold futures eased 0.4% to $1,926.60.
A stronger dollar is hurting gold and if it continues to strengthen, gold can fall below the $1,900 level per ounce, said Edward Meir, an analyst at ED&F Man Capital Markets.
The dollar rose as much as 0.8% to its highest in nearly a month against rivals, making gold more expensive for holders of other currencies.
Investors are now awaiting an ECB policy meeting due on Thursday, while the U.S. Federal Reserve’s next meeting is scheduled for next week.
“All the central banks are in the same boat, they will have to keep printing money, keep easing policy, in order to fight the slump we are in” and that will keep gold supported, Meir said.
Bullion has risen 26% so far this year, after global central banks flooded markets with extraordinary stimulus to offset the economic damage inflicted by the coronavirus pandemic, as it is considered a hedge against inflation and currency debasement.
Meanwhile, capping gold’s decline, Wall Street stocks tumbled amid a tech rout, while U.S.-China tensions and concerns over economic rebound also weighed.
“We interpret gold’s relative strength, in the face of rising yields and a steep correction in risk assets, as a signal that few weak longs remain in precious metals,” TD Securities said in a note. “This mitigates the risk of a deeper pullback despite the break in the pandemic-era trendline which is causing angst among traders.”
Elsewhere, silver fell 2.2% to $26.39 per ounce and platinum was flat at $907.71, while palladium dipped 1.3% to $2,265.61.
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