Gold Markets: Coronavirus, the Fed

Gold prices hit a more than two-month trough on Thursday, weighed down by a robust dollar, with investors looking to U.S. jobless claims data due later in the day to further gauge the pace of a recovery in the world’s largest economy.

Spot gold fell 0.3% to $1,858.08 per ounce by 0049 GMT. Prices earlier hit $1,853.32, the lowest level since July 22.

U.S. gold futures were down 0.3% to $1,862.30.

The dollar index held firm near a more than eight-week peak against rival currencies, as signs of an economic slowdown in Europe and the U.S. renewed concerns about a second wave of novel coronavirus infections.

A firmer dollar makes bullion more expensive for holders of other currencies.

U.S. business activity cooled in September, with gains at factories offset by a retreat at services. Investors now await weekly data, which is expected to show U.S. jobless claims fell slightly but remained elevated.

Euro zone business growth ground to a halt this month as the service industry slammed into reverse, knocked by a resurgence in Covid-19 cases prompting governments to reintroduce restrictions, a survey showed.

Federal Reserve officials on Wednesday doubled down on efforts to convince investors they will keep monetary policy easy for years to allow unemployment to fall, emphasizing that interest rates will stay near zero until inflation gets to 2% and stays there.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.87% to 1,267.14 tonnes on Wednesday.

Silver fell 2.8% to $22.23 per ounce, hitting a more than two-month low earlier in the session.

Platinum was steady at $838.32 per ounce and palladium eased 0.1% to $2,217.90.