|   Commentary


  |   Commentary


Gold at 1-1/2 month trough as dollar rallies on robust economic data, Fed Evan's comments

Gold prices plunged by more than 1 percent to a 1-1/2 month low as the dollar surged to a near 2-month peak, although uncertainties surrounding global economic recovery limited the safe-haven metal's downside.

Spot gold was trading 1.1 percent down at $1,879.29 per ounce by 0706, having hit a low of $1874.66 earlier, its lowest since August 12. The metal has shed nearly 4 percent since Monday. U.S. gold futures were down 1.4 percent to $1,881.45.

The dollar index rallied to a near 2-month peak against its rivals, supported by positive U.S. economic data and concerns about a second wave of coronavirus infections in Europe and Britain.

Data released yesterday showed showing U.S. home sales surged to their highest level in nearly 14 years in August, boosted by record-low mortgage rates and a pandemic-fueled migration to suburbs and low-density areas. Existing home sales increased 2.4 percent to a seasonally adjusted annual rate of 6 million units last month, the highest level since December 2006.

British Prime Minister Boris Johnson unveiled long-lasting restrictions to tackle a second wave of the coronavirus and warned that new measures, which included extending the use of face masks, curfews on pubs, bars and restaurants and larger fines for rule-breakers, could be in place for six months.

The dollar was also supported by comments from a prominent Federal Reserve official, although uncertainty about this year’s U.S. presidential election limited upside.

Chicago Federal Reserve President Charles Evans said the central bank still needed to discuss its new average inflation target and it’s possible for the Fed to raise interest rates before inflation starts to average 2 percent.

On Tuesday, U.S. economic policymakers opened the door to further aid for small businesses hit by the coronavirus, but struggled to agree over how broad it might extend and the manner in which it should be delivered.

U.S.-China. tensions intensified after President Donald Trump told the United Nations General Assembly that China must be held accountable for the COVID-19 outbreak, prompting Beijing to accuse him of lies and abusing the U.N. platform to provoke confrontation.

The greenback against a basket of currencies traded 0.1 percent up at 94.07, having touched a high of 94.25 earlier, its highest since July 27. The U.S. Treasury yields declined, with the benchmark 10-year note yield trading at 0.663 percent.

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