© Reuters.By Barani Krishnan
Investing.com - Gold prices crashed anew on Wednesday as the dollar jumped, defying the logic of the Federal Reserve’s latest meeting minutes to send the yellow metal below $1,950 an ounce.
on Comex settled down $42.80, or 2.1%, at $1,970.30. It sank further, to as low as $1,941, or more than 3%, after the release of the Fed minutes for July. Just a day earlier, December gold soared to a one-week high of $2,023.90.
The selloff revived memories of the “Black Tuesday” crash from a week ago, when December gold lost $93 on the day.
In Wednesday’s session, the , which reflects trades in bullion, slumped $58.79, or 1.1%, to $1,943.27 by 2:51 PM ET (18:51 GMT).
The , the antithesis of the precious metals and safe-havens trade, jumped to above 93, or nearly 1%, at one point.
Traders and analysts fumbled to explain the dollar’s resurgence amid the contents of the Fed minutes, which all but had a dire warning for the U.S. economy in the face of the coronavirus pandemic. It was advice that should have hammered the currency, rather than sent it rallying
“There seemed to be some uncertainty on forward guidance and that has helped to push up rates and the USD in the process,” said Greg Michalowski, commenting on the minutes in a post on Forexlive. “Lack of support for yield curve targeting may also be a reason for the backup in yields and the USD.”
The Fed said banks and others could be under stress in bad outcomes, as well as concerns that an increase in Treasury debt could have implications for market function.
“Risks included additional waves of virus spread that could cause credit markets to tighten again, as well as the loss of fiscal support for households, businesses, and local government,” the central bank said in its July minutes.
Yields on the note were up 0.9% after the release of the Fed minutes. They were down as much as 2.8% earlier in the session, after sliding 3% over two previous days.
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August 20, 2020 at 02:14AM
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Gold Crashes in 'Deja Vu' Selloff, As Dollar Defies Fed - Investing.com
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