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

Published 09/23/2020, 12:02 PM
Updated 09/23/2020, 04:40 PM
© Reuters.

© Reuters.

* 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/
A 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. It 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. "We 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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