Gold inches up as US stimulus package to combat virus stems rush for cash; strong dollar restricts further gains for yellow metal

Spot gold rose 0.1 percent to $1,529.69 per ounce, having risen about 1 percent earlier in the session. US gold futures gained 0.3 percent to $1,530.80 an ounce.

Reuters March 18, 2020 10:44:11 IST
Gold inches up as US stimulus package to combat virus stems rush for cash; strong dollar restricts further gains for yellow metal

Gold edged higher on Wednesday as additional stimulus from the United States eased some concerns over the economic impact of the coronavirus and halted a trend of selling precious metals for cash, although a strong dollar capped gains.

Spot gold rose 0.1 percent to $1,529.69 per ounce, having risen about 1 percent earlier in the session. US gold futures gained 0.3 percent to $1,530.80 an ounce.

IG Markets analyst Kyle Rodda said the steps taken by the US central bank to support liquidity is, in turn, helping the metal.

Gold inches up as US stimulus package to combat virus stems rush for cash strong dollar restricts further gains for yellow metal

Representational image. Reuters

“That has boosted sentiment a little and we saw the unwinding of some of that behaviour, which is ‘sell gold among everything else to find cash,’” he said.

The US Federal Reserve said on Tuesday it would reinstate a funding facility used during the 2008 financial crisis to get credit directly to businesses and households as fears over a liquidity crunch due to the virus have grown in recent days.

Meanwhile, the Trump administration pursued a $1 trillion stimulus package that could deliver $1,000 checks to Americans within two weeks to cushion the economy.

“(However,) the overall strong position of the dollar has limited further gains for gold,” said Michael McCarthy, chief strategist at CMC Markets.

The US dollar hovered near a four-week high scaled on Tuesday, making gold costlier for investors holding other currencies.

Among countries and central banks providing stimulus to their virus hit economies, Britain launched a new lending scheme to provide short-term bridging finance for large businesses hurt by the epidemic, which will be run and funded by the Bank of England.

Underscoring the economic strain from the virus, a survey showed that the mood among German investors slumped in March to levels last seen at the beginning of the world financial crisis in 2008 due to alarm at the impact on Europe’s largest economy.

Elsewhere, palladium rose 1.1 percent to $1,661.11 per ounce, while platinum gained 1.4 percent to $670.72. Silver rose 1.4 percent to $12.76 after eight straight sessions of falls.

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