Gold Falls on Stronger Dollar
Gold was up in Asia’s precious metals Wednesday morning. This followed a rise in the dollar. The safe-haven currency was supported by a strong U.S. housing market, against rising COVID-19 cases.
Gold futures dropped 1.01% at $1,888.04 by 12:46 PM ET (4:46 AM GMT) in commodities.
The latest housing market figures from the U.S. gave the dollar a boost on Wednesday. In 14 years sales passed the 6 million mark with the highest number.
Positive news for the dollar was the U.S. House of Representatives passing a bill to maintain government spending.
The increasing COVID-19 cases in Europe and the U.S. have also pushed investors toward the dollar currency. France, Spain, and the U.K. are all dealing with a resurgence in cases.
In the U.K., new restrictions have already been introduced. The UK government is considering reinstating the earlier, stricter lockdown.
The surge of investors towards the greenback has come at the expense of gold this time. The recent sell-off in stocks has leveled that market. The rise in the dollar also makes the yellow metal more expensive for traders using other currencies.
Investors are now bracing for the latest U.S. non-farm payroll data due on October 2. This will tell if there has been an improvement in the U.S. economy.
Oil Demand to Return to Pre-crisis Levels
Meanwhile, the Chief Executive of Russian oil producer Neft said he expects global oil consumption to return to the pre-crisis level. That would be slightly later than the energy ministry’s forecast for the second quarter or the second half of 2021.
On Wednesday, CEO Alexander Dyukov spoke at a conference, the first large-scale industry event since Russia scrapped public events in March.
Dyukov said current oil prices of above $40 per barrel are comfortable both for the company and the federal budget.
He also said the pandemic hasn’t gone anywhere but they are sure that there won’t be such a harsh reaction. First of all in Europe, to the pandemic, there won’t be harsh quarantines, he added.
This will allow the market to balance, he said. In the second half of next year, they hope to be able to return to the consumption volumes of 2019.
In Thursday’s commodity news, Russian Energy Minister Alexander Novak said he expected global oil demand to recover. He expects a full recovery in the second quarter of 2021.
