(Kitco News) – The gold market is trying to hold on to support around $1,750 an ounce. Analysts are warning investors that prices could drop back to last month’s lows around $1,700 as the U.S. dollar continues to see significant upside momentum.
The U.S. dollar index is trading at 109 points, testing July’s 20-year high. The greenback has pushed solidly above parity with the euro in what analysts have called an unstoppable rally.
As to how much momentum the U.S. dollar has, currency analysts at Brown Brothers Harriman said that a solid break above its 20-year high at 109.24 could lead to a run to 120.
“Can the dollar rally another 10% from current levels? Fundamentally, that seems hard to justify, but stranger things have happened,” the analysts said. “We maintain our strong dollar call. As risk-off impulses ebb, the dollar should continue to benefit from the relatively strong U.S. economic outlook and heightened Fed tightening expectations.”
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