(Bloomberg) -- Gold edged lower on renewed strength in the US dollar, after a rally triggered by the Bank of England’s decision to unveil a bond-buying program to boost UK bonds.
Bullion has come under pressure in the past two weeks as the greenback strengthened to record levels, with the metal hitting its lowest level in more than two years earlier on Wednesday.
Then the UK central bank’s intervention spurred declines in the dollar and Treasury yields, providing relief for gold which is priced in the greenback. Bullion rose 1.9% in Wednesday’s trading session, clocking the biggest daily gain since early March.
Despite the recent rally, “global recession fears will likely remain a dominant theme” for gold prices, Avtar Sandu, senior manager of commodities at Phillip Nova, said in a note. Analysts are also watching to see whether bullion’s two-year low this week might be the bottom of its rout from above $2,000 an ounce, he added.
Sentiment for the bullion market remains bearish as the Federal Reserve signals it will keeping increasing rates, with holdings in gold-backed exchange-traded funds slumping to the lowest since May 2020. Bullion, which does not bear interest, usually has a negative correlation with the dollar and rates as it is non-yielding.
Spot gold slipped 0.4% to $1,653.63 an ounce at 12:31 p.m. in Singapore. The Bloomberg Dollar Spot Index gained 0.4%, following its 1% slide in the previous session. Silver, platinum and palladium fell.
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