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Gold dips on dollar gains, with central banks in focus

Published 07/09/2020, 08:30 pm
Updated 08/09/2020, 04:18 am
© Reuters.
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* Gold likely to trade sideways for some time -analyst

* U.S. markets shut for Labor Day holiday on Monday

* India's coronavirus infections overtake Brazil

* Markets await ECB policy decision on Thursday

* Interactive graphic tracking global spread of coronavirus: open https://tmsnrt.rs/3aIRuz7 in an external browser (New throughout, updates prices, market activity and comments)

By Diptendu Lahiri

Sept 7 (Reuters) - Gold eased on Monday as the dollar strengthened, although economic uncertainties limited losses for the precious metal as investors awaited developments from central banks.

Spot gold XAU= was down 0.2% to $1,928.82 per ounce at 2:01 p.m. EDT (1801 GMT), while U.S. gold futures GCv1 were little changed at $1,933.60, with U.S. markets shut for the Labor Day holiday.

"A higher dollar is weighing on gold, while longer-term uncertainties still persisting in the market is putting a floor under prices," Carsten Menke, analyst at Julius Baer, said.

Menke said gold is likely to trade sideways "as recessionary fears have already been priced in and investors are now waiting to see what happens next in term of central bank policies".

The dollar index .DXY rose 0.3%, making gold more expensive for those holding other currencies. USD/

Global central banks have cut interest rates to tackle the coronavirus crisis, with gold gaining over 27% this year as lower interest rates decrease the opportunity cost of holding non-yielding bullion. now focused on the European Central Bank's policy decision on Thursday.

"We wouldn't be surprised to see gold bouncing off the lower end of this corridor and going higher over the next weeks, but a fall below $1,900 cannot be ruled out if there's a chance of expectation of stronger economic data from U.S.," Commerzbank (DE:CBKG) analyst Eugen Weinberg said.

Meanwhile, coronavirus cases in the world's second-largest bullion consumer India rose above Brazil into second place behind the United States. GOL/AS

"India's gold imports last month were good and the recent price movement was not so much initiated and supported by physical demand for bars and coins but exchange-traded funds," Weinberg added

Elsewhere, silver XAG= rose 0.5% to $27 per ounce, while platinum XPT= jumped 1.5% to $908.26 and palladium XPD= edged lower by 0.1% to $2,295.13.

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