Gold dropped from recent highs ($1,830) to below $1,800 during this week, and back up again to $1,800 on Thursday.
The two-step move came about firstly as the U.S Dollar strengthened – the DXY Dollar Index jumping almost 1% since Tuesday – applying downward pressure on the gold price, which is priced in USD. This drove the price to below the 50 and 200-Day moving averages, which were hovering just below $1,800/oz.
Secondly, in late Thursday trade the European Central Bank’s President, Christine Lagarde, announced that although the European money printing program will likely be tapered by year-end, the future of the ‘emergency funding program’ won’t be decided until December. Lagarde made it clear that, ‘this lady isn’t tapering.’ This drove gold prices back up sharply to just below the $1,800/oz mark.
In other news, in its latest “Beige Book,” released on Wednesday, the Fed said rising inflation was being exacerbated by a shortage of goods and that this would likely be passed onto consumers in many areas.
The Fed also said that growth overall had “downshifted slightly to a moderate pace” amid rising public health concerns during the July-through-August period.
The yellow metal was last seen trading at $1,798/oz.
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