Gold surrenders early gains to trade flat at $1,731.5 per ounce; coronavirus vaccine hopes spur risk appetite
Gold gave up early gains on Tuesday to trade flat below a 7-1/2-year high hit in the last session, as risk appetite improved on promising early-stage data for a potential COVID-19 vaccine
Gold gave up early gains on Tuesday to trade flat below a 7-1/2-year high hit in the last session, as risk appetite improved on promising early-stage data for a potential COVID-19 vaccine.
Spot gold was steady at $1,731.50 per ounce by 0650 GMT, after rising 0.5 percent earlier in the day on renewed Sino-US trade tensions and global stimulus. US gold futures fell 0.1 percent to $1,733.30.
Despite the news on a potential coronavirus vaccine lighting a fire under the equity markets, gold will remain very well bid due to the “ridiculously huge” Federal Reserve balance sheet, said Stephen Innes, chief market strategist at financial services firm AxiCorp.
On Monday, the metal hit its highest since October 2012 before retreating to close lower, as stocks and oil surged after drugmaker Moderna (MRNA.O) said its COVID-19 experimental vaccine showed promising results in an early-stage trial.
Asian shares jumped as the news boosted hopes for a swift reopening of the global economy.
“Gold investors still see the opportunity on both sides of the coin right now because optimism from lockdowns is also inflationary,” said Innes.
“But the trade war itself is a huge risk as we saw through 2019, that was the primary driver for gold prices to go up.”
Gold tends to benefit from widespread stimulus from central banks because it is widely viewed as a hedge against inflation and currency debasement.
The metal has risen about 14 percent this year as central banks rolled out a wave of interest rate cuts and other stimulus to limit the economic damage from the pandemic.
The International Monetary Fund’s head said the global economy would take much longer to recover fully from the shock caused by the pandemic than initially expected.
Raising fears of a further deterioration in Sino-US relations, stock exchange Nasdaq Inc (NDAQ.O) is set to unveil new restrictions on initial public offerings, which will make it more difficult for some Chinese companies to debut on it, sources said.
“The upside (for gold) may be limited as (safe-) haven flows will probably pour into the US dollar (in the event of escalating US-China tensions), capping the appeal of the anti-fiat metal,” DailyFx currency strategist Ilya Spivak said.
“On the technical front, it looks like gold has broken out of a bullish symmetrical triangle pattern, which sets the stage for gains.”
Palladium rose 0.7 percent to $2,026.88 per ounce, having jumped more than 9 percent at one point on Monday.
Platinum fell 0.4 percent to $814.67, and silver declined 0.7 percent to $17.05.
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