Gold Wealth

Gold drops from 4-month high as Central Banks’ views in focus

*US Federal Reserve chief says it is essential to begin talks on plans to taper as economy continues to power ahead, emerging from the disruptive COVID-19 pandemic

Isola Moses | ConsumerConnect

Precious metal Gold has slipped from the highest level in more than four months, as the Dollar and Treasury yields edged up with investors weighing the future of monetary policy in a post-COVID-19 pandemic world.

In view of this development, agency report says Randal Quarles, Vice-Chairman for Supervision at the United States (US) Federal Reserve (Fed) said Wednesday, May 26 that it would be essential for the country’s Central Bank to start discussing plans to reduce its massive bond purchases in coming months, if the economy continues to power ahead emerging from the disruptive Coronavirus disease.

Meanwhile, New Zealand followed in the footsteps of Canada to flag a potential interest-rate increase 2021, as central banks worldwide begin to tip-toe away from their current emergency monetary settings, report stated.

It was gathered gold has erased its 2021 losses amid signs of rising inflation and a potentially uneven economic recovery as some countries grappled with a resurgence in COVID-19 cases.

The Fed officials reportedly, have pushed back against the threat that a spike in price pressures will prove lasting, while reassuring investors on the central bank’s accommodative stance.

Avtar Sandu, a Senior Manager for commodities at Phillip Futures Pte, said: “With the reassurances from the banks, it is likely that even if inflation is higher than expected, the central bankers are still going to be dovish.

“What really matters for gold are real rates.”

He stated that central bankers would continue to keep rates low, which would be bullish for gold.

Specifically, spot gold dropped 0.1% to $1,894.45 an ounce by 8:46 a.m. in Singapore. Prices climbed to $1,912.76 Wednesday, the highest since January 8 this year before paring gains.

Similarly, silver, palladium and platinum all fell, according to report.

The Bloomberg Dollar Spot Index also ticked higher after rising 0.3% Wednesday.

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