Gold price steadies after futures top $2,000
US gold futures declined 0.2% to $1,973.40 per ounce after crossing the $2,000 per ounce mark earlier in the session.
The dollar recovered on data showing US manufacturing expanded in August at the fastest pace since late 2018, reducing demand for bullion as an alternative asset.
The manufacturing report “confirms that the US economic recovery is real and hence we experienced a bounce in the dollar index,” Naeem Aslam, chief market analyst at Ava Trade, said in an interview with Bloomberg.
“Speculators have been selling the dollar like there was a death sentence issued for the dollar index by the Fed. The mighty dollar has come back.”
Gold’s recent surge came as the greenback dropped to the lowest in more than two years and investors bet the US Federal Reserve’s more relaxed stance on inflation.
Bob Haberkorn, senior market strategist at RJO Futures, believes the better-than-expected manufacturing data “doesn’t necessarily change the picture” for the Federal Reserve. “The trend (in gold) is still higher,” he added.
“Gold should be supported in this environment of firming inflation expectations, which is driving down real rates, and a weakening US dollar,” Daniel Ghali, commodity strategist at TD Securities, told Reuters.
Bullion has soared about 30% this year and reached an all-time high in early August amid massive stimulus aimed at reviving economies hit by the coronavirus pandemic.
“The pandemic is far from over and if the economic outlook worsens, central banks could increase their monetary interventions yet again,” precious metals refiner Heraeus Holding GmbH said in a report, forecasting gold to trade in a range of $1,850 to $2,200 over the rest of the year.
“Investors will continue to see gold as a safe haven, pushing prices higher,” it said.
(With files from Reuters and Bloomberg)
