Yesterday, the quote closed above the important level of $1,800 amid a weaker US dollar. Today, however, the greenback strengthened pushing gold down.
On Tuesday, the precious metal closed above the psychologically important level of $1,800. As a reminder, the asset soared by more than 1% and reached its 3-weeks high within the previous day.
On Tuesday, August 24, the quote rose by 0.1%, or $2.20, closing at $1,808.50 amid a weaker US dollar. Since the beginning of the week, USDX fell by 0.6%, following a sharp increase in the previous week.
The greenback is incurring losses ahead of the Federal Reserve's prestigious annual Jackson Hole policy symposium scheduled for August 26-28. Chair Jerome Powell is expected to postpone tapering due to a critical coronavirus situation worldwide.
The number of new Delta infections is surging, raising concerns about the future of the global economic recovery. Such risks pose a threat to the greenback and provide support to safe-haven assets like gold.
Alternatively, the US regulator may ignore the COVID-19 situation. In such a case, the Fed's chair may announce the start of early tapering. This will boost the US dollar and cause turbulence in the precious metal market.
Gold came under pressure early today amid a stronger US dollar. At the moment of writing, USDX gained 0.14% to 93.03. Meanwhile, gold incurred losses. The asset fell by 0.74%, or $13.4, from its previous close.
The precious metal dropped below the important level of $1,800 and traded at $1,795.1. A plunge came after the House of Representatives approved a $3.5 trillion budget bill.
The plan should also get the approval of the Senate that has recently passed Biden's $1 trillion infrastructure initiative. The House of Representatives has not given the green light to the bill yet.
Experts suggest that if both initiatives get approval, the greenback may swell to new highs. This will also drastically change investors' sentiment and increase risk appetite. In such a case, demand for safe havens is likely to drop, affecting the price of gold.