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PRECIOUS-Gold drops to near two-week low as dollar rebounds

Published 2020-09-21, 08:30 a/m
Updated 2020-09-21, 08:36 a/m
© Reuters.

* European shares drop to 2-week low

* Silver, palladium down over 1%

* Interactive graphic tracking global spread of coronavirus: https://graphics.reuters.com/world-coronavirus-tracker-and-maps/ (Updates prices)

By Nakul Iyer

Sept 21 (Reuters) - Gold fell to its lowest in nearly two weeks on Monday as the dollar strengthened, while scepticism over additional stimulus measures from U.S. Federal Reserve policymakers' speeches this week added further pressure.

Spot gold XAU= dropped 1% to $1,930.07 per ounce by 1211 GMT, having declined to its lowest since Sept. 9 at $1,928.14.

U.S. gold futures GCv1 fell 1.2% to $1,938.30 per ounce.

"(The) tug-of-war between the dollar and gold is expected to play out until there is a major shift in global risk sentiment, or if investors can get a better grasp on the U.S. monetary policy outlook," said FXTM market analyst Han Tan.

The dollar index .DXY rose 0.4% against its rivals, making gold more expensive for holders of other currencies. USD/

Investors now await speeches by Fed committee members, including Chairman Jerome Powell, who will appear before Congressional committees later this week. (central banks) are in a wait and see mode and it has tempered the expectations of gold bulls," said Michael Hewson, chief market analyst at CMC Markets UK.

It is unlikely that we'll get any clarity on how the Fed is going to arrive at its inflation targets and on monetary policy until at least the end of the U.S. election, he added.

Gold's decline came despite European shares dropping to a 2-week low as surging COVID-19 cases in Europe prompted renewed lockdown measures in some countries and clouded the recovery outlook. EU.

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"The U.S. elections in early November certainly pose a major event risk on gold's trajectory. Should risk aversion creep up over the coming six weeks, that may translate into upward pressure for bullion prices in the interim," FXTM's Tan noted.

Elsewhere, silver XAG= fell 1.7% to $26.31 per ounce, platinum XPT= slipped about 1% to $918.97 and palladium XPD= was down 1.5% at $2,322.79.

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