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Gold collapsed to a 3-week low
06:43 2021-07-27 UTC--4
Exchange Rates analysis

Yesterday, gold bars dived beyond the psychological mark of $1,800. Their final price on the New York Comex Exchange was $1,799. Compared to last Friday, the asset fell by $2.60, or 0.1%.

The most actively traded contracts fell yesterday to the lowest value since July 6. Although during the trading, the quotes rose to $1,812. The springboard for them was the weak dollar, whose index fell by 0.4% on July 26.

It can be recalled that gold is in inverse correlation with the US currency. That is, the fall of the dollar was supposed to provoke a rise in the price of the precious metal. However, this time, the rule did not work.

These days, gold and the dollar are showing solidarity, declining in anticipation of the main event of the week. A meeting of the US Federal Reserve will be held today or tomorrow. It is expected that at the meeting, the regulator will announce its plans for further support of the economy, including a possible increase in interest rates.

At the moment, investors cannot agree on the nature of the Fed's future rhetoric: whether it will be dovish or hawkish. Therefore, uncertainty is growing around the upcoming event, which puts pressure on both the US currency exchange rate and the price of gold.

Meanwhile, experts are voicing possible scenarios for the development of events after the meeting. If the Fed hints at further maintaining a soft monetary policy in the face of a tense epidemiological situation, this will be a positive factor for gold, but a negative one for the dollar. And vice versa. Discussion about the imminent curtailment of stimulus measures may push the dollar to new highs, but will collapse the precious metal market.

Commerzbank analysts believe that the signal announcing the beginning of the tightening of the US Federal Reserve rate will be a decrease in the volume of share repurchases. If such statements are made, gold prices will immediately react with a sharp decline.

However, at the slightest hint of continued inflation, the value of the precious metal has a chance to grow. According to the forecast of the analyst of Insignia Consultants, Chintan Karnani, in this case, the quotes will jump above $1,900.

Meanwhile, on the eve of the 2-day meeting, the yellow metal is pessimistic. It continues to trade below the key mark and maintains negative dynamics. So, at the time of preparation of the material, the value of the asset fell to $1,796. 65. It fell by $2.55, or 0.14%.

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Silver sank by 0.47%, to $25.2. But according to the results of yesterday's session, the gray asset, on the contrary, rose by 0.3%. Other metals also showed growth on Monday. Copper gained 4.2%, reaching the level of $4.59, which is the highest since June. Platinum closed trading with a plus of 0.8%, reaching $1,070. The cost of palladium increased by 0.6% to $ 2,678.

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