Gold Plumbs Near 16-Month Low Before Return to $1,700

By Barani Krishnan

Investing.com — Gold finally saw the outsized move some had expected in the “Fed-vacuum” week — though it was a plunge in price, rather than a surge.

With just under a week before the central bank’s decision on July’s rate hike, benchmark gold futures for delivery on New York’s Comex plumbed a January 31 low of $1,678.60. It settled the day at $1713.20, up 13.2, or 0.8%.

The , which traders say is a better reflector at times of gold’s pricing and demand nuances compared with Comex futures, also hit a near 16-month low, at $1,680.96.

Since last week’s initial 11-month low of $1,695, gold bulls haven’t been able to pull the market decisively higher despite Fed officials refraining this week from making comments in customary observance of the 10-day moratorium on speeches before their July 27 .

There was no clear driver for gold’s renewed plunge on Thursday. The dollar, which typically sets the direction for gold by moving in the opposite way, also fell this time as the European Central Bank joined many other central banks in , in a focus on fighting inflation rather than preventing a recession.

The , which pits the greenback against six major currencies, was at under 107 on Thursday, after piercing above 109 last week for its highest levels since December 2002 on bets of aggressive rate hikes by the

Federal Reserve

.

But some saw the return to $1,700 as indicative of gold’s resilience.

“It’s been another volatile session and one in which gold appears to have come back into favor,” said Craig Erlam, analyst at online trading platform OANDA. “A hawkish ECB may be behind the move, but the gold rally much exceeds the drop-off in the dollar. We seem to be seeing an inverse of the price action late last week. Is the gold recovery trade underway?”