Gold Retreating From a Two-Month High And the Dollar’s Strength Limits its Appeal

Gold prices fell from their highest level in more than two months today, Tuesday, as the dollar’s recovery limited the metal’s appeal as a safe haven, while investors speculate that the US economic recovery at a faster than expected pace may lead to a hike in interest rates.

And gold fell in immediate trading 0.4% to 1786.10 dollars an ounce, after hitting the highest level since February 25 at 1797.75 dollars on Monday.

US gold futures fell 0.4 percent to $ 1,785.50.

Harish said in. Head of Commodity Research at Geojit Financial Services “The main reason for the slight correction is the strength of the dollar,” adding that the dollar’s maintenance of its strength is likely to put pressure on gold.

The dollar index rose 0.3 percent, which reduces the appeal of gold to holders of other currencies.

Fed Chairman Jerome Powell said yesterday that the US economy is doing better but “has not outgrown the risk yet.”

The US central bank wants to maintain monetary easing in the near future, but the acceleration of the economic recovery has raised speculation that support for the economy will be withdrawn faster than expected.

Higher interest rates increase the opportunity cost of holding gold that does not yield a return.

Palladium rose 0.1% to $2,973.29 an ounce, after rising to an all-time high of $3,007.73 on Friday.

Silver fell 0.3% to $26.79 after hitting the highest level since March 1 yesterday, while palladium settled at $1230.49.