LONDON: Gold fell for a second straight session on Tuesday as the dollar climbed to a near two-month peak, with investors keeping a close eye on remarks from US Federal Reserve officials on the state of the economy.
The path ahead for the economy remains uncertain and the US central bank will do more if needed, Federal Reserve Chair Jerome Powell told a congressional panel on Tuesday.
Separately, Chicago Federal Reserve President Charles Evans said the US economy risks recession, if the US Congress fails to pass a fiscal package.
Spot gold fell 0.5% to $1,903.46 per ounce by 11:23 a.m. EDT (1523 GMT), reversing earlier gains. US gold futures eased 0.1% to $1,908.40 per ounce.
A steep sell-off across asset classes on Monday dragged gold down to its lowest level since Aug. 12, at $1,882.70.
“When we see gold and equities down both at the same time, investors need cash. Precious metals are always a good source of raising cash. It was a factor yesterday but today we think it’s mostly dollar and technical,” said Chris Gaffney, president of world markets at TIAA Bank.
“The dollar is maintaining its strength and fundamentally that is weighing on gold prices.”
The dollar notched a high since late-July against a basket of other major currencies, with Washington’s lack of progress on reaching a fiscal stimulus agreement.
Expectations are that the passing of Justice Ruth Bader Ginsburg would create additional divisiveness between the Democrats and the Republicans, which would lead to a lesser possibility of a stimulus plan being put forth, said David Meger, director of metals trading at High Ridge Futures.
Rising coronavirus cases have cast a shadow on hopes of quick economic recovery and prompted central banks to loosen their monetary stance, helping gold prices climb about 25% so far this year.
But, gold has pared gains since hitting a record peak in August as the US Congress for weeks has remained deadlocked over the size and shape of its next coronavirus-response bill. Elsewhere, silver fell 1.5% to $24.37, platinum dropped 1.4% to $869.31 and palladium was down 1.1% to $2,248.03.