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Gold & Other Precious Metals Under Pressure from Strong Dollar

September 2, 2020 at 14:12 by Vladimir Vyun

Gold and other precious metals, as well as copper, fell today, with some of them logging very big losses. Market analysts provided various possible reasons for the decline. Some of them speculated that good manufacturing data released in the United States and other parts of the world caused risk appetite, limiting demand for gold in its role as a safe haven. But while that could explain the drop of the yellow metal, such an explanation does not help to understand the poor performance of other metals, especially risk-sensitive and growth-related copper.

The more likely reason for the decline was the strength of the US dollar, which put pressure on dollar-priced commodities. Initially, it looked like the greenback was going to retreat as an employment report from Automatic Data Processing suggested that the recovery of the labor market is not as strong as market participants were hoping for. Yet markets showed a surprisingly apathetic reaction to the report, and the dollar continued to move down. Now, traders wait for nonfarm payrolls due for release on Friday. Analysts predicted that the report will show strong growth of employment.

Futures for delivery of gold in December dropped by $25.4 (1.28%) to $1,953.5 per troy ounce as of 14:09 GMT on COMEX today. Contract for silver slumped by $1.09 (3.82%) to $27.55 per ounce. Spot price for platinum tanked by $36.65 (3.87%) to $910.1 per ounce, and palladium dropped by $31.69 (1.39%) to $2,247.47 per ounce. Copper for delivery in December declined by $0.02 (0.66%) to $3.0085 per pound.

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