Gold prices strengthened on August 18, 2021, as increasing worries over the economic fallout from the spread of the coronavirus’ Delta variant dented the sentiment geared towards the riskier assets, lifting bullion’s appeal.
Spot gold gained 0.3% to trade at $1,791.67 per ounce by 0314 GMT, hovering below the more than 1-week high of 1,795.25 hits on Tuesday. The United States gold futures were up 0.3% to $1,793.30. Jeffrey Halley, a senior market analyst working at the Asia Pacific at OANDA, stated:
“The elephant in the room is this Delta variant and whether it does materially affect the global recovery. In that situation, gold is likely to find more haven buying.”
Asian shares remained at near year-to-date lows as the Delta variant continues to sweep through the entire region. Also pointing to a slowdown in the economy, the US retail sales dropped more than anticipated in July.
The investors now await the minutes from Federal Reserve’s July meeting later in the day for some guidance on its tapering plans. Halley added:
“Gold’s fate will be decided by the FOMC and whether they signal imminent tapering in September. If that leads to a higher dollar and U.S. yields gold is likely to fall back below $1,700.”
On Tuesday Minneapolis Fed President Neel Kashkari stated that it could be quite ‘reasonable’ to start tapering later this year. However, all that will depend on the progress in the labor market.
Fed Reserve Chair Jerome Powell said that it is now unclear whether the major outbreak of the Delta variant will have a significant impact on the economy. The dollar index remained near its recent peaks on other majors.
Gold mostly competes with the dollar as a haven store of value during political and financial uncertainties, with a higher dollar making gold quite expensive for the investors holding other currencies.
Silver gained 0.7% per ounce, while platinum gained 1.3% to trade at $1,009.67. Palladium rose by nearly 1.2% to trade at $2,519.18, bouncing off its near 2-month trough hit on August 17.
