Gold dips as dollar advances after strong U.S. data

FILE PHOTO: Gold bullion is displayed at Hatton Garden Metals precious metal dealers in London, Britain
Aaron Saldanha
·2 min read

By Aaron Saldanha

(Reuters) - Gold prices dipped on Tuesday as its safe haven allure was blunted by a strong dollar, which added to gains after the release of strong U.S. economic data amid the new coronavirus strain in the UK.

Spot gold fell 0.2% to $1,872.56 per ounce by 1038 a.m. EDT (1538 GMT), while U.S. gold futures fell 0.4% to $1,876.

Bullion hit a six-week high of $1,906.46 on Monday, mainly supported as U.S. Congress approved a $892 billion coronavirus aid package to support the pandemic-ravaged economy.

"While gold prices are prone to profit-taking into the year-end given prices are up over 20% this year, a number of risks continue to linger amid tighter lockdown measures and restrictions, new strain of the virus and Brexit negotiations,” Standard Chartered Analyst Suki Cooper said.

The dollar firmed against a basket of peers, helped by U.S. economic data, and weakening rivals, which were weighed down by Brexit uncertainty.

Data earlier showed the U.S. economy grew at a record pace in the third quarter, weighing on the safe-haven bullion.

"Stimulus talks are behind us...(but) I'm not super optimistic on gold at the moment. I don't think it has the firepower to break out to the upside," said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

"If the new strain does make its way into the U.S. and does reinfect people, that could really cause some additional economic damage and that could be kind of the next tailwind for gold."

In other metals, silver fell 1.5% to $25.76 an ounce, distancing itself from a more than three-month peak hit in the previous session.

Platinum was down 0.1% at $1,008.01 and palladium rose 0.6% to $2,321.80.

(Reporting by Aaron Saldanha in Bengaluru; Editing by Nick Macfie)