Gold futures reversed on Tuesday, with the yellow metal slipping after a rally to record levels.
With the main contract as high as $ 1,974.40 an ounce overnight, GC00 gold futures,
It fell $ 23.80 to $ 1,907.20 an ounce.
China’s gold consumption fell 38% yoy in the first half of 2020, the China Gold Association said, news that may have contributed to Tuesday’s weakness.
Gold has risen further over the past week, and gained over 25% this year.
Implementation of the Republican $ 1 trillion stimulus plan in the Senate added to concerns about monetary financing of government spending, and the Federal Reserve began its two-day meeting on Tuesday to set the interest rate. The gains for gold also come amid the strained relationship between the United States and China.
Looking at the bigger picture, analysts at BCA Research say the weakness of the dollar is just one factor behind the rise in gold, noting that gold has risen against a large number of currencies.
“The collapse of real returns has been the link between easy politics and gold. As central banks inject liquidity, real rates decrease and the opportunity cost of owning gold falls. Central banks continue to be successful in their effort to relax. Even if nominal returns are flat or slightly higher, inflation expectations continue to rise and real returns decrease, ”they said in a note to clients.
They said “gold will remain an offer until Treasury yields TMUBMUSD10Y,
begin to take off from their 0.6% readings. “
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