Gold dips 1% as dollar rises, but heads for quarterly gain

Ritu

By Ritu,

Capital Sands

Gold prices dropped 1% on Tuesday as the dollar strengthened and strong Chinese economic data boosted risk appetite, but bullion was on track for a sixth consecutive quarterly rise amid fears over a global shutdown due to the coronavirus.

Spot gold was down 1% at $1,605.64 per ounce by 0930 GMT. It has gained nearly 6% for the quarter, and about 1.4% this month. U.S. gold futures fell 1.2% to $1,599.00.

“The combination of a strengthening dollar and better risk appetite is weighing on gold,” analyst said.

The dollar index rose 0.4% after posting a nearly 1% gain overnight, as Japanese investors and companies rushed to cover a greenback shortage before their fiscal year ends.

Strong Chinese factory data lifted world stocks on Tuesday but markets were heading their worst quarter since 2008 on jitters about the economic hit from the coronavirus.

More than 777,000 people have been infected by the coronavirus across the world and 37,561 have died.

Central banks around the world have announced major fiscal and monetary packages to try to limit the economic damage, as governments have extended lockdowns to combat the virus’ spread.

Meanwhile, Russia’s central bank announced it would stop buying gold starting April 1 and offered no explanation behind the decision.

“On the technical side, (gold) prices could jump higher towards $1,675 if a solid daily close above $1,630 is achieved. Alternatively, sustained weakness below may open the door back towards $1,600,” analysts said .

Among other precious metals, platinum dropped 0.3% to $720.91 and was on track to post its biggest quarterly percentage decline since 2008.

The world’s largest platinum producers Anglo American Platinum, Sibanye-Stillwater and Impala Platinum have declared force majeure on contracts after a three-week national lockdown in South Africa forced operations to close.

Palladium slipped 0.9% to $2,306.10 an ounce, while silver dropped 1% to $13.97, and was set to post its worst quarter since 2013.

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