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PRECIOUS-Gold slides 3% on strong dollar, stimulus concerns; silver tumbles

Published 22/09/2020, 01:46 am
© Reuters.
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(Updates prices)

* Silver down more than 9%, platinum more than 6%

* Dollar on track to post best day since March 19

* Close above $1,900/oz needed for a short-term reprieve -analyst

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

By Arundhati Sarkar

Sept 21 (Reuters) - Gold slumped over 3% on Monday, sliding to its lowest level in more than a month, as a broader market sell-off driven by uncertainty over more U.S. fiscal stimulus pressured the precious complex along with a stronger dollar.

Silver XAG= plunged 8.3% to $24.53 as of 1:49 p.m. EDT (1749 GMT), its lowest level in over a month.

Spot gold XAU= dropped 2.1% to $1,909.05 per ounce, after falling as much as 3.4% earlier in the session, its lowest since Aug. 12. U.S. gold futures GCv1 settled down 2.6% at 1,910.60.

"Gold should be trading higher on safe-haven demand but it's kind of a repeat back like in the spring when the market sell-off comes, market participants have been selling off assets across the board," said Bob Haberkorn, senior market strategist at RJO Futures.

"There's just a lack of safe-haven buying and it's following the sell-off in equities and dollar strength is an additional weakness."

Wall Street's main indexes hit their lowest levels in nearly seven weeks on Monday, while the dollar index .DXY rose 0.8% against its rivals, its highest daily percentage gain since March 19. MKTS/GLOB USD/

"The chances of Congress agreeing on any stimulus package before January is asymptotically close to zero," said Tai Wong, head of base and precious metals derivatives trading at BMO.

"A move back and close above $1,900 is needed to grant a short-term reprieve but looks like we may have to test the lows of the correction, $1,863 at some stage soon."

Gold prices are down nearly 10% from an all-time high hit in early August as hopes of further stimulus dwindled.

The U.S. Congress has for weeks remained deadlocked over the size and shape of a fifth coronavirus-response bill, on top of the approximately $3 trillion already enacted into law.

Gold has been feeding off progressive rounds of more stimulus and the fact that this has stopped in the United States – at least for now – seems to have halted the gold rally in its tracks, ED&F Man Capital Markets analyst Edward Meir said in a note.

Investors now await speeches by Fed committee members, including Chairman Jerome Powell, who will appear before Congressional committees later this week. other metals, platinum XPT= declined 5.2% to $879.48 after falling as much as 8% earlier in the session and palladium XPD= dropped 3.9% to $2,265.10.

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