Asia FX muted, dollar fragile as CPI data boosts Sept rate cut bets
By Barani Krishnan
Investing.com - Gold prices dipped for a third-straight day as bullion’s biggest movers stayed to the sidelines watching the gradual reopening of business in the United States and across the world from Covid-19 lockdowns.
But the yellow metal’s underlying strength was intact and a lunge toward the higher $1,700 levels was likely once more stimulus measures for the pandemic are unfurled in coming weeks.
“Ultimately, we argue that the monetary impulse will remain the primary driver of investment demand for the yellow metal,” TD Securities said in a note.
“The balance of risks remains to the upside for gold,” the Canadian bank-backed brokerage said. “That being said, while we expect some marginal CTA selling flow in response to the deteriorating momentum, we don't expect any significant changes in trend follower positioning.”
Gold futures for June delivery on New York’s COMEX settled down $1.60, or 0.1%, at $1,722.20 per ounce.
Spot gold, which tracks live trades in bullion, was down $6.22, or 0.4%, at $1,707.66 by 2:48 PM ET (18:48 GMT).
Georgia, Oklahoma, Alaska and South Carolina are among the 50 states across America that have allowed some businesses to reopen while others, including New York — the epicenter of the U.S. Covid-19 outbreak — are planning to relax lockdowns in coming weeks.
But White House health advisor Anthony Fauci said Tuesday the United States “could be in for a bad fall” if researchers don’t find an effective treatment to fight the coronavirus by then.
That was a flag for the safe-haven crowd behind gold that there was still immense risk in the U.S. recovery from the pandemic.
Gold bulls are also encouraged by expectations of more Covid-19 stimulus measures from the Federal Reserve and the Trump administration in coming weeks, said Ed Moya, senior analyst at online trading platform OANDA.
“Gold’s bullish outlook mainly revolves around high expectations that the Fed will deliver another $3 trillion in stimulus, while the U.S. government is good for $2 trillion more over the next couple months,” Moya said.