Gold eases as greenback rebounds from 2-year lows
Gold prices declined, hovering away from a near 2-week high scaled last week, as the dollar attempted a minor recovery after tumbling to multi-years lows on Federal Reserve’s dovish stance.
Spot gold was trading 0.3 percent lower at $1,959.77 per ounce by 0732 GMT, having hit a high of $1977.18 on Thursday, its highest since August 19. The safe haven metal was down 0.8 percent so far this month, having gained for the last four. U.S. gold futures declined 0.4 percent to $1,967.10.
Gold has gained nearly 30 percent so far this year, having recorded an all-time high of $2,072.28 earlier this month.
The dollar index rebounded after plunging to an over 2-year low earlier in the session on the U.S. Federal Reserve’s new policy framework that suggested interest rates would remain low for some time.
In a speech last Thursday, Fed Chair Jerome Powell at the virtual Jackson Hole conference said the U.S. central bank would seek to keep inflation at 2 percent, on average, in order to support the labor market and broader economy.
Risk sentiment slightly improved after data showed activity in China’s services sector expanded at a much faster pace in August, as demand across the economy continues to recover from a coronavirus-induced slump. China's non-manufacturing Purchasing Managers’ Index (PMI) rose to 55.2 from 54.2 in July, while August composite PMI, which includes both manufacturing and services activity, rose to 54.5 from July’s 54.1.
On Friday, the dollar slumped nearly 1.2 percent to a 1-1/2 week trough against the Japanese yen after Japanese Prime Minister Shinzo Abe announced his resignation due to worsening health, stoking doubts about future fiscal and monetary stimulus policies. However, concerns eased somewhat on news Chief Cabinet Secretary Yoshihide Suga would succeed Abe as prime minister.
The greenback against a basket of currencies traded 0.1 percent higher at 92.32, having touched a low of 92.15 earlier, its lowest since May 2018 and was on track for its fourth consecutive monthly decline. The U.S. Treasury yields tumbled, with the benchmark 10-year note yield trading at 0.721 percent.
Investors will closely watch U.S. opinion polls this week in the wake of the political party conventions, while on the data front, the U.S. ISM manufacturing survey is expected to show a continued pickup in activity in August.
The August payrolls on Friday are forecast to rise 1.4 million with the unemployment rate easing to 9.8 percent.
A host of Federal Reserve officials are set to speak this week, beginning with Vice Chair Richard Clarida at 1300 GMT and Raphael Bostic at 1430 GMT for fresh clues about the details of the new inflation approach.