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Gold Crumbles as ‘Vengeful Dollar’ Takes Out Commodities

Published 08/06/2021, 01:58 PM
Updated 08/06/2021, 02:00 PM

By Barani Krishnan

Investing.com - Gold had its worst day and week in almost two months, crumbling to $1,750 lows, as the dollar sprung back from a recent spate of selling amid a resilient U.S. jobs report that again raised questions about the stimulus provided by the Federal Reserve to markets and the economy.

“It’s the vengeful dollar,” said Philip Streible, precious metals strategist for Blueline Futures in Chicago. “DX is coming back in a way that’s delivering an excruciating blow to most commodities today.”

DX, the trading symbol for the Dollar Index, was up 0.6% at 92.81 by 1:30 PM ET (17:30 GMT) as gold futures on New York’s Comex settled. It hit a near two-week high at 92.85 earlier, after tumbling to a one-month low of 91.82 earlier in the week.

Gold’s front-month futures on Comex settled down $43.40, or 2.5%, at $1,763.10 an ounce. For the week, it fell 3%.

A hedge against economic and political troubles as well as inflation, gold got a break just last week when Federal Reserve Chair Jerome Powell said the central bank wasn’t ready to raise U.S. interest rates yet as it was still focused on supporting a nation recovering from the coronavirus pandemic.

Powell also refused to go near any talk of when the Fed might consider tapering the combined $120 billion the Fed was plonking each month into Treasury bonds and agency mortgage‑backed securities.

Getting toward the Fed’s twin mandates of maximum employment for Americans and sustainable inflation were the goals, he reasoned.

The Fed’s lower-for-longer rates and indefinite stimulus for now might, however, be debated again after the U.S. July jobs report issued on Friday cited the creation of 943,000 new jobs that brought unemployment down to 5.4%. Economists tracked by Investing.com had projected just 870,000 new jobs for July, and a jobless rate of 5.7%.

Since January, gold has been on a tough ride that began in August last year — when it came off record highs above $2,000 and meandered for a few months before stumbling into a systemic decay from November, when the first breakthroughs in Covid-19 vaccine efficiencies were announced. At one point, gold raked a near 11-month bottom at under $1,674.

After appearing to break that dark spell with a bounce back to $1,905 in May, gold saw a new round of short-selling that took it back and forth between $1,700 and $1,800.

Latest comments

Can Gold or USDs buy you a healthy Biosphere ??(hint: No.) Rethink your priorities, IF YOU HAVE TIME.
I’ve always enjoyed your articles and I honestly get a kick out of the back and forth between you and some of your readers. I appreciate that you care enough to defend your work. Gold has made of mockery of traditional thinking since last August. Would love to read your thoughts on “untraditional” thinking? (ie cryptocurrency as the hedge gold should be).
I don’t get it either. Yet right before our eyes, a bunch of algorithms stacked via blockchain have become an asset class that is still finding its way into mainstream finance culture. ETF’s have been approved in several major jurisdictions globally and liquidity often resetrved for the metal has been siphoned into this new class. How long can this last?
 It's a systemic move to destroy gold, to ensure it never again threatens DX in a significant way.
I wholeheartedly agree with this statement and it’s forced me to alter my investment portfolio. Cheers and looking forward to reading your future pieces.
The US Federal Reserve continues its criminal activity in destroying and combating gold. The US Federal Reserve does nothing but fight gold and print trillions of dollars. Could you please tell me why the gold is down now there is no reason. 10-year bond collapse, US stock index down, very bad inflation, very bad economic data. Answer me now please here in YouTube I am very sad and very nervous. Gold and silver always fall apart for no reason, please answer me
if you are a gold investor, don't see this a sad thing. This is a good chance for you to buy. I am looking forward to 1200 so that I can make a big long. Road to the Rome is not straight but finally it comes to Rome ^^
If you are a gold investor, don't see this as a sad thing. The more it goes down, the more good chances for you to buy. I'm now looking forward to 1200 so I can make a big long. Road to the Rome is not straight but finally it comes to Rome. Just keep your leverage cleverly ^^
Well said Will well said I coudnt agree more its fed and their mates Banks of course playing games fir their pockets. Lets hope it ll go higher.
Bitcoin could be the new Gold
If you think that, you don't know why people buy either.
If i there was a rating for article i would happily would have given this article a 0
 Ackman also gives "likes" for his own comments! That's how desperate he is for legitimacy! Ha ha ha ...
Keep crying by replying me a third grade clueless commodity analyst and writer
Keep crying by replying me a third grade clueless commodity analyst and writer
Good Barani....this time I won't remember your last post where your analyst Moya says we're going from 1850 to 1900 and I refused and said that let's go down....to wait until September 1750 1680.... . after so many unpleasantness ​​with dislikers.... I'm here .... waking up happy and a lot of bad buyers now burning .... Thank you for your excellent work in spreading this well known news... maybe after the symposium we will have 2 more big red seas ^^ And I'll look forward to your new articles :)
Lol watch what happens when people realize rates can never be risen again
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