Gold futures hit their lowest level since Aug. 12 on Wednesday, as the US dollar strengthened on concerns about rising COVID-19 cases in Europe, while doubts continued about further stimulus from the United States Federal Reserve. Meanwhile, the US dollar index is pressing its highest level since July 24, bolstered by upbeat US home sales data and concerns about a second wave of coronavirus infections in Europe.
At 09:43 GMT, December Comex gold is trading at $ 1891.30, down $ 16.30 or -0.85%.
Gold also fell for a third session on Wednesday on remarks by a key Federal Reserve official about the state of the economy and the possibility of a rise in interest rates.
Existing Home Sales Jump to a 14-Year High as Prices Set Another Record
After a record-breaking July, the housing market still shows no signs of cooling. Existing home sales increased 2.4% to a seasonally adjusted annualized rate of 6 million units, according to the National Association of Realtors. Sales increased 10.5% compared to August 2019. This is the highest sales pace since December 2006, before the Great Recession.
Sales were hampered only by a lack of supply. There were 1.49 million homes for sale at the end of August, down 18.6% annually at a 3.0-month supply. The number of homes for sale was last this solid, in 2006 it was more than double the current supply.
That meager supply pushed the median price of an existing home sold in August to a record $ 310,600. That is 11.4% per year. In the third quarter of this year, real estate wealth will have increased by $ 1.5 trillion from the second quarter.
Fed’s Evans sees ‘recessionary dynamics’ risks without further fiscal stimulus
It is important that Congress approve more spending to help the economy during the pandemic or there is a risk that the economy will sink into a downward spiral, Chicago Fed Chairman Charles Evans warned Tuesday.
“Every week and every month we go by without renewal of additional fiscal support… we risk a longer period of slower growth, if not recessionary dynamics,” Evans said during a discussion sponsored by OMFIF, an international forum for economic policy.
Evans said he was surprised to see how strong the economy has recovered from the shutdown in April and May. The economy has returned by 90% even though the death toll has been “horrible,” Evans said. Manufacturing has “come back a lot” led by the auto sector, he said.
Daily forecast
The dollar got a boost and gold took a hit Tuesday after the Chicago Fed chairman said, “I’d like to raise rates as soon as anyone else,” Evans said. For me, that will be when the economy is very strong and real interest rates are going up, “he said. “Monetary policy would in a sense track the economy,” he said.
“We could start raising rates before we start averaging 2%, we have to discuss that, he added.
Evans’ comments caught gold traders off guard and that could lead to an even more bearish attitude if other Fed speakers reiterate their concerns. Traders will be on the lookout for clues from FOMC members Loretta Mester and Randal Quarles, as well as Fed Chairman Powell, on their view of the economy and whether further quantitative easing may not provide an additional boost to the economy. U.S.
We could also see a volatile reaction to the downside if the US Manufacturing PMI Flash report surpasses the previous reading of 53.1.
To see all of today’s economic events, see our economic calendar.
