Economy 2 MIN READ

Gold prices dip as dollar strengthens towards pandemic high

April 27, 2022By Reuters

Gold prices fell on Wednesday as the U.S. dollar consolidated at its highest level in more than two years and pressured demand for greenback-priced bullion.

Spot gold was down 0.6% at USD 1,893.70 per ounce, as of 0809 GMT. U.S. gold futures slid 0.3% to USD 1,898.60.

“So, USD 1,900 is clearly a pivotal level for today’s session … looking further out, it’s not looking ideal at the moment with the U.S. dollar at a 25-month high,” trading firm City Index’s senior market analyst Matt Simpson said.

The dollar stood at its highest level since the early days of the pandemic and was heading for its best month since 2015, supported by the prospect of aggressive U.S. rate hikes and on safe-haven flows fanned by slowing growth in China and Europe.

A stronger dollar makes greenback-priced gold less attractive for other currency holders. The greenback is also seen as a rival safe-haven asset to gold during economic and political crises.

Headlines from Russia provided some support to gold on Tuesday as investors sought a safe haven, but the Ukraine crisis has not been as much of a bullish story recently for bullion as it was a few weeks ago, and demand from it is unlikely to last through the week, Simpson said.

Russian energy giant Gazprom said it had halted gas supplies to Bulgaria and Poland for failing to pay for gas in roubles, the Kremlin’s toughest response yet to sanctions imposed by the West over the conflict in Ukraine.

Most Asian stock indexes fell as growing fears over the global economy drove investors to dump riskier assets in favour of safe havens such as the U.S. dollar and government bonds.

Spot silver dropped 0.2% to USD 23.43 per ounce, platinum dipped 1.3% to USD 920.23, and palladium eased 0.1% to USD 2,183.36.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by Subhranshu Sahu, Shounak Dasgupta and Sherry Jacob-Phillips)

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