Gold Weakens as Central Banks Look Towards Economic Recovery
Arslan Butt • 1 min read
Gold prices are trading bearish on Thursday, sliding lower from two-week highs after the Fed sounded more optimistic about the economic outlook for the US in the coming months. At the time of writing, GOLD is trading at a little above $1,939.
In its latest policy meeting, the US central bank kept its monetary policy steady as expected and confirmed its intent to hold interest rates close to zero in the coming years with a focus on boosting employment levels in the country. The Fed’s less dovish than feared statement helped strengthen the US dollar, which shares a negative correlation with gold, further weakening the prices of the yellow metal.
Gold’s losses, however, remain limited as the overall market sentiment continues to focus on the economic fallout from the ongoing coronavirus pandemic. Retail sales data from the US also revealed a weak outlook, with consumer spending slowing down during August and raising fears that economic recovery has stalled.
Meanwhile, earlier today, the BOJ also chose to keep its monetary policy unchanged. However, it expressed optimism that the worst effects of the pandemic on the Japanese economy could have passed and the focus has shifted towards recovery, further denting gold’s safe haven appeal.