Gold falls and dollar firms on hopes of rebound in China

Bengaluru — Gold prices fell on Tuesday as the dollar firmed and as shares rose on hopes of a rebound in China economic activity, while safe-haven demand amid concerns over the coronavirus outbreak kept the metal on track for its sixth straight quarterly gain.

Spot gold fell 0.5% to $1,613.40 an ounce by 3.27am GMT. It gained about 6.4% for the quarter, and about 1.8% for the month. US gold futures eased 0.2% to $1,615.80.

“The dollar, yields and a better equity market performance are pressuring gold,” said Stephen Innes, chief market strategist at financial services firm AxiCorp, adding that the negative correlation between equities and gold has started to form again.

The dollar gained against its rivals as investors braced for prolonged uncertainty and governments tightened lockdowns and launched monetary and fiscal measures to fight the virus.

Asian shares rallied on positive factory data from China that raised hopes of a rebound in economic activity, while longer-term US Treasury yields followed stock market rally on Monday as the US government was in talks with health-care companies to mass produce coronavirus vaccines.

Weighing further on gold, Russia’s central bank announced it would stop buying gold starting April 1 and offered no explanation behind the decision.

“However, it’s not catching traders by surprise as lower oil prices mean fewer petro dollars per barrel for the central bank to buy gold. If oil prices remain depressed, there will probably be a similar curtailment of bullion purchases across other oil-exporting central banks,” Axicorp’s Innes said.

Oil prices remained near 18-year lows as the virus-led shutdowns put pressure on demand.

Among other precious metals, platinum rose 0.5% to $726.51, but was on track to post its biggest quarterly percentage loss since 2008. The world’s largest platinum producers Anglo American Platinum, Sibanye-Stillwater and Impala Platinum have declared force majeure on contracts after a three-week national lockdown in SA forced operations to close.

Palladium fell 0.6% to $2,313.94 an ounce, while silver shed 0.3% to $14.07, and was set to post its worst quarter since June 2013.

Reuters