Gold Consolidates Without Big Loss Despite Dollar Index Hitting 94


© Reuters.

By Barani Krishnan

Investing.com – It was an event that should have sent gold well below $1,900. But the surge of the to four-month highs above 94 didn’t spark a meltdown in bullion on Tuesday — rather, it resulted in the consolidation of the yellow metal already in correcting mode the past two months.  

, which reflects real-time trades in bullion, was down $5.28, or 0.3%, at $1,906.92 by 2:31 PM ET (14:31 GMT). It’s low for the day — $1,894 — was, however, above Monday’s two-month trough of $1,883.21.

“Gold has broken lower over the past couple of sessions as the greenback strength gathers momentum,” gold chartist Rajan Dhall said in a post on FX Street. “It is hard to confirm if this is a deep correction or a reversal although the latter seems less likely. The global risk environment has not been too great either and gold usually shines during times of turmoil so there may be a lagging effect for this theme.”

Richard Perry of Hantec Markets concurred with that.

“With rising risk aversion standing out as a primary catalyst helping steer the US Dollar higher, the DXY Index could extend its advance alongside the S&P 500 , or fear-gauge,” Perry said. “If expected market volatility reverts back lower, however, so too could USD price action.”

settled down just $3, or 0.2%, at $1,907.60 per ounce, after bottoming at $1,899.10. It lost $51 or 2.6% on Monday, after a two-month low at $1,885.40.

“Gold is holding up nicely when you consider the near 10% slide that has hit ,” Ed Moya, a macro analyst at New York’s OANDA, said. 

READ  Record number of bets expected for Super Bowl

“Gold’s fundamentals remain intact and nothing will likely change that short of a policy mistake from Fed Chair Powell.  Virus and election uncertainty will continue to drive safe-haven flows to gold over the next couple of months.”

Federal Reserve Chairman Jay Powell told Congress on Tuesday that the United States needs another round of fiscal stimulus to cope with the coronavirus pandemic as economic uncertainties remain overwhelming. Congress’ tussle over a fifth coronavirus package, after earlier disbursements of nearly $3 trillion, has held up gold from returning to the $2,000 highs and above, last seen in early August. 

Dhall, the gold chartist, said if gold bulls take charge, the next resistance for bullion could come at just $1,915. “Beyond that, the black upward sloping trendline could also be another resistance zone to watch.” 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

READ  Karen Millen stores in doubt as Boohoo bids for online arm





READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here