» Welcome to Currency Converter Calculator      

Resurgent Dollar Drags Gold Down

In this edition, we look at why the recent strengthening of the US Dollar (USD) was bad news for gold prices and review how the Sterling has been performing in recent days.

Gold Falls By 3 Percent

Gold prices fell by 3 percent on Monday to reach a 1-month low as the US Dollar strengthened against a basket of global currencies, including the Euro (EUR) and the Great British Pound (GBP).

Silver prices also fell sharply and closed the day down almost 10 percent, but Forex traders are more interested in price developments related to gold as the precious metal has been competing with the Dollar to be the preferred safe-haven investment over the course of the pandemic.

Monday also saw a wider market sell-off, with many equity markets and other asset classes taking a hit due to renewed uncertainty about plans by the US government to launch a fiscal stimulus package to help revive the economy from its coronavirus-induced recession.

With the Senate still divided on the matter, it looks highly unlikely that a package will be agreed before the end of 2020.

Commenting on the reaction in the gold market today, Bob Haberkorn, a senior market strategist at RJO Futures, said, “Gold should be trading higher on safe-haven demand but it’s kind of a repeat back like in the spring when the market sell-off comes, market participants have been selling off assets across the board.”

Continuing, he said, “There’s just a lack of safe-haven buying and it’s following the sell-off in equities and dollar strength is an additional weakness.”

Sterling Falls On Brexit Uncertainty

Sterling got off to a bad start to the week, falling against the Euro amid mounting concerns that the UK could crash out of the European Union (EU) without a post-Brexit trade deal in place.

The Great British Pound is currently trading around the 1.10 mark against the Euro, and with politicians failing to find common ground for a deal, we should expect to see Sterling continue to struggle to regain ground against the Euro and other major currencies.

The UK officially left the European Union earlier this year, but it is currently still in the pre-agreed transition period which will expire at the end of 2020 and could hurt UK-EU trade unless a deal is reached over the coming months.

A Quick Summary

  • Gold fell by 3 percent on Monday amid a broader sell-off across asset classes.
  • This sell-off was prompted by growing uncertainty about a US fiscal stimulus package.
  • The US Dollar benefitted from this, with the Greenback strengthening against a range of currencies on Monday.
  • Meanwhile, Sterling saw its value fall due to the continued stalemate in negotiations between the EU and the UK to agree to a post-Brexit trade deal.

Currency Converter Calculator’s Forex News Roundups aim to help enthusiasts and traders stay up to date with the latest happenings in the global currency exchange market, with a focus on the Greenback.