Meanwhile, the dollar index rose 0.3%, making gold more expensive for those holding other currencies.
Gold is likely to trade sideways as recessionary fears have already been priced in
“A higher dollar is weighing on gold, while longer-term uncertainties still persisting in the market is putting a floor under prices,” Carsten Menke, analyst at Julius Baer, told Reuters.
“Gold is likely to trade sideways as recessionary fears have already been priced in and investors are now waiting to see what happens next in term of central bank policies,” Menke added.
Central banks around the globe have cut interest rates to tackle the coronavirus crisis, with gold gaining over 27% this year as lower interest rates decrease the opportunity cost of holding non-yielding bullion.
Investors are now focused on the European Central Bank’s policy decision on Thursday. Most analysts do not anticipate a change in policy stance, but are more interested in the message ECB will deliver on its inflation forecasts.
“We wouldn’t be surprised to see gold bouncing off the lower end of this corridor and going higher over the next weeks, but a fall below $1,900 cannot be ruled out if there’s a chance of expectation of stronger economic data from US,” Commerzbank analyst Eugen Weinberg told Reuters.
(With files from Reuters)
