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Gold's rally loses steam eases to Dh218.25 per gram

Staff Report/Dubai
Filed on July 10, 2020
Spot gold fell 0.6 per cent to $1,799.23 per ounce. - Reuters

Gold prices retreated on Thursday, a day after vaulting to nearly nine-year highs, as investors embraced the safe-haven greenback in the face of record US coronavirus cases.

Gold prices eased on Friday morning in the local market after it reached its peak of Dh219.5 per gram on Thursday.

The 24K gold quoted ah Dh218.25 per gram; 22K was quoted at 205.00; 21K at 195.50 and 18K at 167.50 respectively.

Gold prices retreated on Thursday, a day after vaulting to nearly nine-year highs, as investors embraced the safe-haven greenback in the face of record US coronavirus cases.

Spot gold fell 0.6 per cent to $1,799.23 per ounce by 1:36 p.m. ET (1736 GMT), having surged to its highest since September 2011 at $1,817.71 on Wednesday. US gold futures settled down 0.9 per cent at $1,803.8.

"Gold has been overbought quite a bit after it surpassed the $1,800 level and now we are seeing some investors selling off," said Edward Meir, analyst at ED&F Man Capital Markets.

"The dollar is also climbing a bit, so that is weighing on gold as well. But there are no fundamental reasons as such for the pullback."

The dollar rallied from a four-week low as US stocks fell with market sentiment turning cautious as the United States hit another record high on new coronavirus cases.

US Federal Reserve officials on Wednesday raised fresh doubts about the durability of the US recovery, while new business surveys highlighted developing risks from the relentless coronavirus pandemic.

"The $1,800 remains a strong psychological resistance level. Although bulls have cut through this level like a hot knife through butter, weakness below this point could trigger a decline back towards $1,765," said FXTM analyst Lukman Otunuga.

"If $1,800 proves to be a new reliable support, this could open the gates towards $1,820 and $1,828."

Central banks worldwide have slashed interest rates in recent months, providing in some cases unprecedented amounts of stimulus to help soften the blow to the economy from the pandemic.

Stimulus tends to boost gold, which is considered a hedge against inflation and currency debasement.

"These stimulus (measures) are not going away very soon. If we see the global supply chain, it has been massively disrupted and that disruption adds to inflation as well," said Ryan McKay, a commodity strategist at TD Securities.

Among other metals, silver declined 0.9per cent to $18.61 an ounce having earlier hit its highest since September 2019 at $19.02.

Palladium climbed 1.1 per cent to $1,936.51, while platinum slid 2.3 per cent to $824.41. - with inputs from Reuters, business@khaleejtimes.com


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