Soaring Dollar Weighs On Gold

Published on Nov 22, 2021 12:13

Gold dropped to around one week low on 19th November, sliding under $1850 per ounce mark as the US dollar index firmed up further and traders eyed the heavy drop in crude oil prices. Some worries also emerging in the local demand front for Gold after the spot prices surged in last few days. Bulk of the buyers are reportedly holding back their purchases as peak festive season is over now. .

Gold had consolidated just under its five month high earlier in the week as global central bankers reiterated their ultra easy monetary stance. The European Central Bank (ECB) must not rush into a premature tightening when faced with passing or supply-driven inflation shocks, the ECB President Christine Lagarde said. A supply shock will tend to push up inflation and depress output. In this situation, tighter monetary policy would only exacerbate the contractionary effect on the economy, Lagarde noted.

The US Federal Reserve, in its latest monetary policy meeting, had unveiled its plan to slow asset purchases implemented during the pandemic beginning this month. However, after the announcement, Fed Chair Jerome Powell had noted that the end of the bond buying would not mean a rush to raise interest rates.