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PRECIOUS-Gold touches six-week low as firm dollar dims appeal

Published 23/09/2020, 02:02 pm
© Reuters.
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* Silver falls as much as 5.6%

* Dollar holds strong gains against European currencies

* Interactive graphic tracking global spread of coronavirus: https://graphics.reuters.com/world-coronavirus-tracker-and-maps/ (Updates prices)

By Eileen Soreng

Sept 23 (Reuters) - Gold prices hit a six-week low on Wednesday as the dollar strengthened on concerns about rising coronavirus cases in Europe, while doubts emerged over further stimulus from the U.S. Federal Reserve.

Spot gold XAU= fell 1.2% to $1,877.52 per ounce by 801 GMT. Earlier in the session, bullion hit its lowest since Aug. 12 of $1,873.70.

U.S. gold futures GCv1 were down 1.4% at $1,882.50, while the dollar index .DXY hit an eight-week high. USD/ firmer dollar makes bullion more expensive for holders of other currencies.

"We are seeing a risk-off environment taking hold, which means that the dollar continues strengthening and there is a lot of pressure on gold prices in the near-term," said Howie Lee, economist at OCBC Bank.

Also weighing on sentiment were mixed signals from Chicago Federal Reserve President Charles Evans, who on Tuesday said the U.S. economy risks a longer, slower recovery and "recessionary dynamics" if Congress fails to pass an additional fiscal stimulus package. is possible for the Fed to raise interest rates before inflation starts to average 2%, Evans added.

Meanwhile, U.S. economic policymakers opened the door to further aid for small businesses hit by the coronavirus, but provided no quick path. are also seeing a slight pessimism about U.S. fiscal stimulus and that has probably curbed inflation expectations just a little bit," said IG Markets analyst Kyle Rodda.

Gold, viewed as a hedge against inflation and currency debasement, has surged about 24% this year, mainly supported by unprecedented stimulus measures by governments and central banks worldwide to revive their coronavirus-battered economies.

The market is still expecting changes in policy settings that could lead to a stronger gold price overtime but that is a longer-term view, he added.

Elsewhere, silver XAG= slipped 4.5% to $23.31 per ounce, having hit a nearly two-month low of $23.04 earlier in the session.

Platinum XPT= and palladium XPD= were down 1.1% at $857.17 and $2,196.69, respectively.

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