Gold drops to near 2-week low as stocks and dollar rise

07/22/2021 | 05:12am

(Reuters) - Gold prices extended slide to their lowest in nearly two weeks on Thursday on the back of a rebound in stocks and firmer U.S. dollar, while investors looked to the European Central Bank for their stance on policy.

Spot gold fell 0.5% to $1,794.58 per ounce by 0843 GMT. U.S. gold futures slipped 0.5% to $1,793.90.

"Due to the return of the risk appetite to the market, concerns about the possible implications of the coronavirus have again abated," Commerzbank analyst Eugen Weinberg said.

"As a result, gold as a safe haven in this situation has not seen a huge demand."

Stocks returned to near record highs in Europe as investors bet on the ECB keeping its stimulus taps fully open as long as COVID-19 remains a threat to growth.

"It's the market confidence in the ECB and the Federal Reserve's ability to combat any economic danger, and therefore not needing any additional safe haven in the form of gold," Weinberg added.

The dollar index held steady, hovering below a 3-1/2-month peak.

The European Central Bank (ECB) policymakers will implement for the first time changes to their strategy and are all but certain to promise an even longer period of stimulus to make good on the commitment to boost inflation.

Market participants are also looking at the U.S. weekly unemployment claims set to be released later in the day.

"Technically nothing has changed in the last 24 hours (for gold), with the price still traded in the lateral trading range between $1,790 and $1,820," Carlo Alberto De Casa, market analyst at Kinesis said.

"A clear surpass of one of these thresholds would probably indicate the new directionality for bullion."

Meanwhile, benchmark U.S. Treasury yields continued their bounce from five-month lows, further pressuring the bullion.

Elsewhere, silver edged 0.6% lower to $25.07 per ounce, palladium rose 0.5% to $2,666.79, and platinum fell 0.1% to $1,078.48.

(Reporting by Arundhati Sarkar in Bengaluru;Editing by Elaine Hardcastle)

By Arundhati Sarkar

© Reuters 2021
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