Gold subdued on strong dollar; European Central Bank meeting in focus

Gold prices eased as the dollar strengthened, although rising doubts over the economic recovery from the Covid slump limited losses, with investors awaiting the outcome of the ECB meeting this week

(Reuters) - Gold prices eased on Tuesday as the dollar strengthened, although rising doubts over the economic recovery from the COVID-19 slump limited losses, with investors awaiting the outcome of the European Central Bank meeting this week.

 

FUNDAMENTALS

Spot gold was down 0.2% at $1,925.68 per ounce by 0048 GMT.

U.S. gold futures were steady at $1,934.60.

The dollar index rose 0.2% against its rivals, making gold more expensive for holders of other currencies.

More than 27.19 million people have been reported to be infected by the novel coronavirus globally and 888,326​ have died, according to a Reuters tally.

Japan's economy shrank more than initially estimated in the second quarter, while German industrial output rose far less than expected in July, suggesting Europe's largest economy faces a slow return to pre-pandemic production levels.

The U.S. Federal Reserve's landmark shift to a more tolerant stance on inflation will be a drag on the dollar for years and will raise hard questions about the role of central banking, challenging policymakers from Frankfurt to Tokyo.

Gold tends to benefit from widespread stimulus measures from central banks because it is widely viewed as a hedge against inflation and currency debasement.

U.S. stock futures and Asian shares regained some footing on Tuesday.

President Donald Trump on Monday again raised the idea of separating the U.S. and Chinese economies, suggesting the United States would not lose money if the world's two biggest economies no longer did business.

Silver fell 0.9% to $26.75 per ounce, platinum eased 0.2% to $906.17 and palladium gained 0.3% to $2,302.74.

 

(Reporting by Brijesh Patel in Bengaluru; Editing by Devika Syamnath)