Gold Stutters as the Dollar Strengthens, Inflation Data Awaited

The price of gold slid to its lowest level in more than a week as the dollar gained at a time when investors are watching out for a key indicator/report that could provide some insights about the likely policy direction of the Federal Reserve over the coming months.

Spot gold shed 1.2 percent to sell at $2,880 per ounce. This price marks the lowest that the precious metal has been since February 17. The drop comes after gold prices had rallied on Monday to a high of $2,956 as a result of money flowing into the gold market due to the safe-haven appeal of this metal. American gold futures also slid, losing 0.7 percent to sell at $2,909.

This drop in the price of gold is largely a result of the gains made by the greenback. The dollar index gained by 0.2 percent in a move that is seen as clawing back from the 11-week slump that had bogged down the dollar index. The gains made by the dollar have a detrimental effect on gold prices because gold priced in USD becomes very expensive for buyers whose currency isn’t the greenback, so interest in the metal drops when the dollar surges.

More pressure on the price of gold came from President Trump’s announcement that he would wait one more month before beginning to implement the new tariffs on products from Canada and Mexico entering the U.S. The tariffs would now take effect on April 2. He also mentioned that there would be a 25 percent “reciprocal” tariff on cars and other goods from European countries. Trump’s position has been that the U.S. should tax products from countries that tax American-made products entering their markets.

The uncertainty arising from these tariff threats pushed investors to hedge their bets on the U.S. dollar, and this exerted an additional headwind against the price of gold. This also came at a time when many gold investors were taking their profits after gold enjoyed a sustained bull run over the past weeks that made the metal reach new highs.

The gold market is also watching for any clues that can suggest what the monetary policy of America could be over the coming months or even years. On Friday, the PCE (Personal Consumption Expenditures) report will be released. Consensus estimates indicate that the monthly index of this key metric will remain at 0.3 percent, the same as what was recorded last December. If the rate changes, it could trigger higher volatility of gold since the precious metal doesn’t earn any interest for its holders.

Longstanding players like Emperor Metals Inc. (CSE: AUOZ) (OTCQB: EMAUF) (FRA: 9NH) in the gold industry are unlikely to be bothered by these short-term market movements given that the broader outlook for gold is bullish.

NOTE TO INVESTORS: The latest news and updates relating to Emperor Metals Inc. (CSE: AUOZ) (OTCQB: EMAUF) (FRA: 9NH) are available in the company’s newsroom at https://ibn.fm/EMAUF

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