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Gold Has Another Stormy Session Before Closing Higher

CommoditiesAug 21, 2020 03:37PM ET
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By Barani Krishnan

Investing.com - Gold swung nearly $50 on the day before settling up 50 cents in New York futures trade, demonstrating the yellow metal’s return to a rollercoaster mode from the one-way — higher — direction seen just days earlier this week.

Benchmark December gold futures on Comex settled at $1,946.80 versus the previous session’s close of $1,946.30. The high for the session was a relatively close $1,962.95, while the low was a heart-stopping 1,916.90.

The spot price of gold, which reflects trades in bullion, was down $7.33, or 0.4%, at $1,939.77 by 3:00 PM ET (19:00 GMT). Spot gold, which typically trades at a discount to Comex, traded between $1,956.05 and $1,911.75 for the day.

The Dollar Index was again to blame for Friday’s gyrations in gold. The index, which tracks a basket of six currencies weighed against the dollar, gained 0.5% by 3:00 PM ET, hovering at 93.25. Over the past three days, the greenback has been on a logic-suspending rally, while gold has suffered, both driven by the Federal Reserve’s meeting minutes for July released on Wednesday. 

The Fed, at its July 28-29 meeting, dismissed the notion that it should exert controls over the yield curve, the minutes showed. Benchmark yield from the U.S. Treasury’s 10-year note had been negative for most of the past two months and forex traders had been hoping the Fed would keep it that way by subjecting controls on the instrument. When the central bank balked at the idea, it gave forex traders an excuse to drive the Dollar Index higher — despite the trillions of dollars of stimulus issued by the U.S. Congress and actions by the Fed to support a pandemic-struck  economy. 

While U.S. home sales and PMI data were supportive to the dollar on Friday, its continued stay at the 93 handle baffled many analysts who expected a range of below 92.5 as fair value.

The door isn’t closed, however, for gold’s return to $2,000, analysts say.

The Fed’s annual Jackson Hole symposium in Wyoming next week could energize gold bulls and dollar bears back into action as the central bank’s Chairman Jay Powell delivers its Monetary Policy Framework Review, which should double-down on the pledge for ultra-low rates and more currency debasement.

“Gold will likely resume the uptrend and revisit the record high of $2,075 if Powell signals greater tolerance for above-target inflation, fueling a deeper drop in real or inflation-adjusted bond yields and fresh sell-off in the greenback,” said Omkar Godbole on FX Street. 

Ed Moya at OANDA had a supportive view of gold, too.

“The best thing for gold right now will be if the economic recovery continues but is not too robust, thus cementing the need for more fiscal and monetary stimulus.  Too many risks to the outlook remain for anyone to abandon the gold trade.”  

 

Gold Has Another Stormy Session Before Closing Higher
 

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Comments (5)
Milan Patel
Milan Patel Aug 23, 2020 8:25AM ET
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Hello everybody I am Milan patel in India Monday gold bulish ya berish please advice me
Milan Patel
Milan Patel Aug 23, 2020 8:24AM ET
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Hello everybody I am Milan patel in India Monday gold bulish ya berish please advice me
Ahmed Elnashar
Ahmed Elnashar Aug 22, 2020 3:37PM ET
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First of all this my opinion and expectations for gold opnening in 25 of aug as per my view and I'm not responsible for any losses but i trust with this for 100%Price closed in Friday at 1939.In next Monday in first hours price will go downward till point 1930 if he didn't break this point so we can say R1 will be 1930 and price will go up till 1960-1962 so S1 will be 1960 suggest (buy ) aftre point 1960 price will go down to 1915 so S2 1915 (sell) .if he didn't break this point 1915 the price of yellow gold will reach to R2 it will be 1980 if he still above this point price will go to R3 2025 Short review:1: 1930 to 1960 if he didn't break 1930 .suggest points( buy point 1930 to 1939) moving upward.2: from 1960 to 1915. suggest points(Sell point 1960 ) Moving downward.3: if he didn't break 1915 an still up this point will 1915 up to 2005 -2025Suggest points( Buy 1915) moving strong upward. 💪aftre point 2025 gold will down to 1970
Brad Smith
Brad Smith Aug 22, 2020 5:37AM ET
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You can either store your wealth in useless unlimited xerox paper that is subject to an incalculable amount of unforeseen government regulation/tax in the future or store it in physical gold to which the government, apart from holding a gun to your head and stealing it, can do nothing to regulate.
Shahidul Karim
Shahidul Karim Aug 21, 2020 4:46PM ET
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positive
Barani Krishnan
Barani Krishnan Aug 21, 2020 4:46PM ET
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Yes. Curious: Are you from Malaysia? :)
Janus Mun
Janus Mun Aug 21, 2020 4:46PM ET
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Pakistan or Bangladesh more likely...
 
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