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PRECIOUS-Gold drops near two-week low as dollar rebounds

Published 21/09/2020, 08:11 pm
© Reuters.
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* European shares drop to 2-week low

* Silver slips nearly 2%, palladium down 1%

* Interactive graphic tracking global spread of coronavirus: https://graphics.reuters.com/world-coronavirus-tracker-and-maps/ (Recasts, adds comments, updates prices)

By Nakul Iyer

Sept 21 (Reuters) - Gold fell to its lowest in nearly two weeks on Monday hurt by a stronger dollar, while investors looked to U.S. Federal Reserve policymakers' speeches this week for clues on further stimulus measures to revive the coronavirus-battered economy.

Spot gold XAU= dropped 1% to $1,930.36 per ounce by 0946 GMT, having declined to its lowest since Sept. 9 at $1,928.14.

U.S. gold futures GCv1 fell 1.3% to $1,936.90 per ounce.

"Tug-of-war between the dollar and gold is expected to play out until there is a major shift in global risk sentiment, or if investors can get a better grasp on the U.S. monetary policy outlook," said FXTM market analyst Han Tan.

The dollar index .DXY rose 0.4% against its rivals, making gold more expensive for holders of other currencies. USD/

Investors now await speeches by Fed committee members, including Chairman Jerome Powell, who will appear before Congressional committees later this week. (central banks) are in a wait and see mode and it has tempered the expectations of gold bulls," said Michael Hewson, chief market analyst at CMC Markets UK.

It is unlikely that we'll get any clarity on how the Fed is going to arrive at its inflation targets and on monetary policy until at least the end of the U.S. election, he added.

Gold's decline on Monday came despite European shares dropping to a 2-week low as surging COVID-19 cases in Europe prompted renewed lockdown measures in some countries and clouded the recovery outlook. EU.

"The U.S. elections in early November certainly pose a major event risk on gold's trajectory. Should risk aversion creep up over the coming six weeks, that may translate into upward pressure for bullion prices in the interim," FXTM's Tan noted.

Elsewhere, silver XAG= fell nearly 2% to $26.24 per ounce, platinum XPT= slipped 0.9% to $919.68 and palladium XPD= was down 1.4% at $2,324.06.

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