Gold holds firm as rising Covid-19 cases infects hopes of swift recovery

Image: REUTERS/ DENIS BALIHOUSE

Gold held steady above the key $1,800/oz level on Thursday, as worries over mounting Covid-19 cases offset hopes of a swift global economic recovery.

Spot gold was little changed at $1,808.44/oz by 2.43am GMT, after rising to its highest level since September 2011 at $1,817.71 on Wednesday. US gold futures were flat at $1,819.80.

Traders are seen a little exhausted after the metal cleared the $1,800 level, “but no-one seems eager to abandon this trade yet”, said Edward Moya, senior market analyst at broker Oanda.

Gold is looking very bullish both in the short and long term … It has enough catalysts to take it to record territory before the end of the year

“Gold is looking very bullish both in the short and long term … It has enough catalysts to take it to record territory before the end of the year,” said Moya.

Global coronavirus cases reached more than 12-million on Wednesday, with more than half a million dead.

Keeping alive worries over the economic fallout from the pandemic, US Federal Reserve officials on Wednesday suggested the recovery in the world’s largest economy may be stalling.

Meanwhile, Britain’s finance minister promised an additional $38bn to head off an unemployment crisis.

Stimulus tends to boost gold, which is viewed as a hedge against inflation and currency debasement.

Providing further support to gold, the dollar traded near multi-week lows.

Reflecting strong investor demand for the metal, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.3% to 1,182.11 tonnes on Wednesday.

Asian equities ground higher as investors tried to look past gathering Sino-US tension and renewed lockdowns to upcoming company earnings, hoping that global stimulus efforts will yield upbeat outlooks.

Boosting recovery bets, Japan’s core machinery orders rose 1.7% in May from the previous month, versus a 5.4% drop forecast.

Among other metals, palladium rose 0.5% to $1,926.33/oz, while platinum declined 0.3% to $840.95 and silver fell 0.6% to $18.66. — Reuters


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