Gold prices drops far below $2,000 on strong US dollar
- 20th August 2020
- Posted by: Hakeem
- Category: Commodities
The yellow metal was down on Thursday morning at the start of London’s trading session falling far below the $2,000-mark over the strengthening U.S dollar.
Gold futures plunged by 0.80% to trade at $1954.45, 5.50 am GMT
Gold traders pulled back from Gold as the U.S dollar gained bullish momentum on Thursday morning.
In addition, the U.S Treasury yields surged after minutes released by the U.S. Federal Reserve yesterday, paid to the implementation of yield curve controls to keep the cost of borrowing low, thereby increasing the odds against gold bulls.
Stephen Innes, Chief Global Market Strategist at AxiCorp in a note explained the macro that saw the value of gold depreciating in the past few hours ago. He said ;
“There is not a great deal to say about the gold slide; the Fed completely underdelivered on gold market expectations while the stronger dollar merely rubbed salt in the wound.
“But the real sting came after the FOMC minutes were released and showed that meeting participants were somewhat skeptical about yield curve control.
“It is going to be another day of picking up the pieces where a lot of new gold entrants face the harsh reality that gold trading isn’t a one-way street despite what those who wear the gold shaded tin foil hats will tell you.”
But it’s not as if the gold can’t rise again in the absence of yield control curve. It just means gold will need some help for higher inflation break-evens or renewed US dollar pressure.