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Gold dips as dollar becomes preferred safe-haven

Published 28/01/2021, 09:29 pm
© Reuters.
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(Adds analyst comment, updates prices)

* Dollar hovers close to a more than one-week high

* Palladium hits lowest since Dec. 21

* Interactive graphic tracking global spread of coronavirus: https://tmsnrt.rs/3mvcUoa

By Asha Sistla

Jan 28 (Reuters) - Gold eased on Thursday as investors opted for the relative shelter of the U.S. dollar from waning risk-on sentiment and after the U.S. Federal Reserve expressed worries over the slow pace of economic recovery.

Spot gold XAU= was down 0.2% at $1,840 an ounce by 1258 GMT. Prices had fallen to their lowest since Jan. 18 at $1,830.80 on Wednesday. U.S. gold futures GCv1 shed 0.3% to $1,838.60.

"The (Fed) meeting yesterday had no positive impact on gold because, before and after the meeting, the dollar strengthened as it was sought after as a safe-haven due to other concerns in financial markets and that weighed on gold prices," said Commerzbank (DE:CBKG) analyst Daniel Briesemann.

The Fed said the pace of the recovery in U.S. economic activity and employment had moderated in recent months, but kept its key interest rates and monthly bond purchases unchanged. dollar .DXY hovered near a one-week high hit in the previous session after a sharp sell-off on Wall Street on Wednesday and with European equities hitting one-month lows in early Thursday trade. USD/ .EU .N

"If you have a sharp decline in equities, you'd expect gold to come down with it...meaning that quite often people who are looking at the possibility of margin calls raise cash by selling their gold holdings," said StoneX analyst Rhona O'Connell.

The delay in a $1.9 trillion U.S. coronavirus stimulus deal, which has not received a green signal from Republicans, weighed further on gold. (market players) are waiting a little bit longer to see if gold can regain the 200-day moving average or, if it'll fall further to $1,800, which should be quite an attractive buying opportunity," added Commerzbank's Briesemann.

Silver XAG= was up 0.1% to $25.26 an ounce, while platinum XPT= edged down 0.1% to $1,064.39.

Palladium XPD= fell 0.2% to $2,300.04 after touching its lowest since Dec. 21 earlier in the session.

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