Gold prices fell 1% on Tuesday as a strong dollar outweighed lingering economic concerns and investors awaited policy cues from the European Central Bank.
Spot gold was down 0.5% at $1,918.79 per ounce, after falling as much as 1% to $1,907.61. U.S. gold futures fell 0.7% to $1,919.90 per ounce.
If the U.S. Federal Reserve does not announce any fresh fiscal push while the ECB announces some stimulus package, “in dollar terms, gold will face some headwinds,” said OANDA analyst Craig Erlam.
The dollar strengthened against its rivals, making gold more expensive for holders of other currencies, amid bets that policy signals from the ECB on Thursday could weigh on the euro.
Market players also awaited the policy meeting of the Bank of Canada on Wednesday, while the U.S. Fed’s next meeting is scheduled for next week.
Global central banks have saturated markets with extraordinary liquidity steps to offset the economic damage inflicted by the coronavirus, sending gold 26% higher this year as it is considered a shield against inflation and currency debasement.