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Money News

Gold hits one-week low as positive U.S. data buoys dollar

(Reuters) - Gold dropped to its lowest in over a week and was en route to its second straight weekly decline, as a strong rebound in the dollar and a resurgence in U.S. business activity dented bullion’s allure.

FILE PHOTO: Gold bars are pictured on display at Korea Gold Exchange in Seoul, South Korea, August 6, 2020. REUTERS/Kim Hong-Ji

Spot gold fell 0.2% to $1,939.73 per ounce by 11:10 a.m. EDT (1510 GMT), after declining over 1% to $1,910.99. U.S. gold futures rose 0.3% to $1,952.20.

For the week, gold is down 0.2% and prices have retreated sharply from above $2,000 hit earlier this week.

“Prices have endured a roller-coaster week amid weak positioning, delayed stimulus package agreement, a bounce in the U.S. dollar and real rates,” said Standard Chartered analyst Suki Cooper.

The dollar .DXY was up 0.6% against rivals, making gold expensive for holders of other currencies.

U.S. stock indexes rose, while U.S. Treasury yields inched higher after data showed an uptick in business activity to the highest since early 2019 this month.

“We’re seeing some better than expected economic data in some facets, yet there clearly are still concerns in regards to the pandemic; in regards to the employment situation,” said David Meger, director of metals trading at High Ridge Futures.

Investors also kept a close eye on the developments surrounding U.S. coronavirus relief bill after U.S. House of Representatives Speaker Nancy Pelosi on Thursday said she opposed a smaller coronavirus relief bill.

“Barring further profit-taking, we think the longer-term uptrend (for gold) is intact given our expectations for further U.S. dollar weakness and the scale of stimulus, and as we expect interest rates to remain low or negative,” Standard Chartered’s Cooper said.

Elsewhere, silver fell 2% to $26.68 per ounce, but was poised for a weekly rise of 1%.

Platinum fell 0.8%, to $910.40 per ounce, while palladium eased 0.2% to $2,176.19 per ounce.

Reporting by Sumita Layek in Bengaluru; Editing by Alistair Bell

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