Gold slips after vaccine news knocks safe-haven demand
Gold edged lower on Thursday, easing from a near eight-year peak hit in the last session, as solid US manufacturing data and promising results from a Covid-19 vaccine trial revived hopes for a quick economic recovery, denting demand for safe havens.
Spot gold was down 0.1% at $1,767.79/oz by 2.59am GMT, after touching $1,788.96 on Wednesday, its highest since October 2012. US gold futures fell 0.2% to $1,776.80.
A general pro-growth stance across markets is why we’re seeing a little bit of pressure on gold
“A general pro-growth stance across markets is why we’re seeing a little bit of pressure on gold,” said Michael McCarthy, chief strategist at CMC Markets, adding that market action reflected a tussle between concern over rising Covid-19 cases and hopes for a vaccine and positive US data.
Manufacturing activity in the US rebounded in June, hitting its highest in more than a year, while similar surveys from China, Germany and France all pointed to a recovery in factory activity. The better-than-expected economic readings and optimism over a potential vaccine lifted equity markets.
However, “the bull case for gold is still intact, with real rates low and suppressed and which would be able to sustain the high price of gold”, Phillip Futures said in a note.
Markets now await June US employment data and weekly initial jobless claims report on Thursday for clues about the health of the world’s biggest economy as new Covid-19 cases accelerate in several southern states. Offering some respite to gold, the dollar index fell 0.1% against its rivals.
While major market moves are unlikely ahead of the US data, “any deterioration on the ground in Hong Kong could see further support for safe-haven gold”, CMC’s McCarthy said. Protesters in Hong Kong took to the streets on Wednesday in defiance of sweeping security legislation introduced by China to snuff out dissent.
Elsewhere, palladium gained 0.4% to $1,911.76/oz, platinum rose 0.2% to $817.70, while silver fell 0.1% to $17.92. — Reuters
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