Gold failed to maintain its bullish trend after reaching its all-time high on Tuesday. The metal traded at $1,812.05 in the first trading hours, its highest mark since August 5. However, it slumped to $1,802.65 before closing at $1,803.75 and turning red for the day.
In addition, the U.S. dollar fell on Tuesday, retaining its loss for the third straight session. The dollar slumped to 92.81, but the United States Treasury Yield surged, up 1.299%. This surge caused the greenback to remain higher up while putting pressure on the precious metal.
Rising Concerns of the Coronavirus, the Cause of the Movement
It’s believed that the investors were heavily worried about the surging Coronavirus cases, and that might have caused the movement of Gold. Due to the vicious delta variant, experts believe that the U.S. Federal Reserve will delay announcing tapering when the Jackson Hole summit comes up. The variant has diminished hopes about the economy’s growth and cast doubts about tapering.
Looking at the good side, the break of the $1812 barrier indicates that gold may rise to the $1,815 level. Additionally, the metal’s resistance to remain above the $1,800 level signifies that investors are still concerned about the virus. Investors are hoping that cases drop to break even.
Weak Manufacturing Index Weighs on the Greenback
Richmond manufacturing index for August dropped to 9 from 25, which was initially forecasted. The drop in index affected the U.S. dollar, which further resulted in the loss of gold prices. On Tuesday, reports about home sales in July indicated a rise, supporting the U.S. dollar, but led to the drop in gold prices.
Undoubtedly, the spread of the delta variant is causing more harm than good to the economy, the reason for the economic outlook against the expected forecast. The uncertainty regarding the Fed’s plan on tapering in the Jackson Hole meeting is another factor. From the data pulled for August, it’s clear that the economic growth is slow, but all hope isn’t lost yet, as signs of recovery aren’t far-fetched.