Gold Weakens to Over Two-Month Low as Dollar Strengthens - Forex News by FX Leaders

Gold Weakens to Over Two-Month Low as Dollar Strengthens

Posted Thursday, September 24, 2020 by
Arslan Butt • 1 min read

On Thursday, gold prices fell to an over two-month low as the US dollar strengthened amid the risk-off sentiment in global markets over worries about delay in economic recovery after the coronavirus pandemic. At the time of writing, GOLD is trading at a little above $1,855.

The US dollar has been making gains over the past few sessions as markets worried about economic recovery in Europe getting derailed due to fresh lockdown restrictions driven by a resurgence in the number of cases. Meanwhile, economic data releases and recent comments by Fed officials highlights fears of economic recovery in the US also slowing down.

While this sentiment is supporting the safe haven appeal of gold, gains remain under pressure as the dollar also remains in favor as a safe haven currency. Gold shares a negative correlation with the US dollar as a stronger dollar makes the yellow metal more expensive for holders of other currencies.

Gold also remains supported over Fed officials maintaining a dovish stance on the monetary policy. Recent statements by Fed officials stress on the need for more stimulus and reiterate the central bank’s plans to keep monetary policy loose for several years in order to bring down the unemployment rate in the US.

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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