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PRECIOUS-Gold eases as recovery hopes gain traction
* Equities rise, dollar recovers from multi-year low
* Fundamentals for gold still positive, say analysts
* India gold imports rise in August
* Interactive graphic tracking global spread of coronavirus: open tmsnrt.rs/3aIRuz7 in an external browser (Updates prices)
Sept 2 (Reuters) – Gold backtracked on Wednesday from a near two-week high in the prior session as the dollar rebounded and strong U.S. manufacturing data raised hopes of a swifter global economic recovery.
Spot gold fell 0.7% to $1,957.15 per ounce by 1133 GMT, after hitting its highest since Aug. 19 at $1,991.91 on Tuesday.
U.S. gold futures dropped 0.6% to $1,966.70.
Gold is being weighed down by the rise in equity markets and the dollar, but “it’s not very surprising that investors will take a little bit of profit” after Tuesday’s rally in gold, said Commerzbank analyst Eugen Weinberg.
“However, besides other strong fundamentals like weak economy and lower interest rates, Australian and U.S. mints reporting very high demand for gold coins will take gold above $2,000 in the long run.”
The dollar index <.DXY > rebounded from a two-year low after data revealed that manufacturing activity in the U.S. increased more than expected in August, which followed similar positive indicators this week from China and Europe.
A stronger greenback makes gold expensive for holders of other currencies.
The robust data also boosted equity markets.
Nonetheless, expectations that U.S. interest rates would stay low for longer under the new monetary policy approach from the U.S. Federal Reserve put a floor under gold prices.
Low interest rates reduce the opportunity cost of holding non-yielding bullion, also viewed as a hedge against inflation and currency debasement.
On the physical side, although overall consumption remained weak, especially in top buyer China, gold sales from Australia’s Perth Mint rose threefold year-on-year in August, while India saw imports jump, pointing to a gradual recovery. [nL4N2FZ1WK
Meanwhile, Turkey’s gold imports surged four-fold as Turks scrambled to hedge against record drops in the lira currency.
Elsewhere, silver dipped 2.1% to $27.58 per ounce, platinum slipped 1.2%, to $929.94, and palladium fell 1% to $2,248.72.
