Gold prices retreated slightly from a more than one-week peak on Tuesday as some investors opted for the dollar instead as surging COVID-19 Delta variant cases posed a threat to a global economic recovery.
Spot gold fell 0.2% to $1,784.02 per ounce by 1:59 pm EDT (1759 GMT) after hitting its highest since Aug. 6 at $1,795.25. US gold futures settled 0.1% lower at 1,787.80 per ounce.
The stronger dollar is adding some pressure on the metals, said Daniel Pavilonis, senior market strategist at RJO Futures.
“US Treasury yields are giving gold a little bit of cover, and we’re seeing a higher probability of inflation without rising interest rates,” Pavilonis said.
The dollar index jumped 0.5%, also benefiting some safe haven interest as disappointing US retail sales data, rising COVID-19 infections worldwide and turmoil in Afghanistan dented appetite for riskier assets such as equities.
Gold often competes with the dollar as a safe store of value during political and financial uncertainties, with a higher dollar also making gold more expensive for those holding other currencies.
The market’s focus now turns to minutes from the Federal Reserve’s July meeting due on Wednesday for cues on the US central bank’s stimulus tapering.
“We believe it likely that oncoming asset purchase reductions are already factored into the gold price – but the pace of those reductions is still quite uncertain,” HSBC analyst James Steel said in a note.
“Afghan events do not usually move gold, but the swift and apparently complete Taliban victory may in directly support’safe haven’ assets such as bullion, even if only modestly.… The impact on gold may be greater than at first imagined,” Steel added in the note.
Elsewhere, silver fell 0.9% to $23.60 per ounce, after having hit its highest since Aug. 9 at $23.95.
Platinum shed 3.1% to $990.38 per ounce, and palladium slid 4.6% to $2,485.55 per ounce after earlier slipping to a near two-month low of $2,481.52.
(Reporting by Arundhati Sarkar in Bengaluru; editing by David Evans and Will Dunham)