Gold holds steady around the $1,700 mark

Bengaluru — Gold prices edged lower on Tuesday as moves by some countries to relax coronavirus restrictions reduced the metal’s safe-haven appeal, even though markets remained wary of souring relations between China and the US.

Spot gold eased 0.2% to $1,698.39 an ounce by 3.30am GMT. US gold futures fell 0.5% to $1,704.80.

“We are holding quite steady around the $1,700 level. On one side, you’ve got easing in lockdowns and that is probably improving investor sentiment and a move away from safe havens towards risk assets,” said ING analyst Warren Patterson.

“On the other side, the tensions between China and the US in relation to Covid-19 are reigniting once again. These two opposing forces are keeping the market on hold at the moment.”

Italy and the US were among a slew of countries tentatively easing the lockdowns on Monday to revive economies, which propped up equities and oil markets.

Investors, however, remained worried about brewing Sino-US tensions after President Donald Trump threatened new tariffs on China for its handling of the outbreak. The Trump administration is “turbocharging” an initiative to remove global industrial supply chains from China as it weighs new tariffs.

Gold, which is considered an alternative asset during times of economic and political turmoil, rose 18% last year due to the tariff war and interest rate cuts by the US Federal Reserve.

It has gained 12% so far this year as the Fed has kept its benchmark rate at near zero and pumped trillions in emergency funding into US financial markets, while other central banks and countries have taken similar measures to prop up their virus-hit economies.

Widespread monetary stimulus measures will be gold’s longer-term tailwind, analysts said, as the metal is used as a hedge against inflation and currency debasement.

Meanwhile, investors awaited US ISM non-manufacturing PMI data, due later in the day, and weekly jobless claims and April non-farm payrolls numbers scheduled for later this week.

“The consensus is for very bad numbers. The main catalyst for gold here is the extent to which they can surprise lower or higher. The data should really deviate from expectations to really animate gold one way or the other,” DailyFx currency strategist Ilya Spivak said.

Among other metals, palladium rose 0.6% to $1,859.47 an ounce. Platinum eased 0.2% to $764.56 an ounce, while silver slipped 0.4% to $14.79.

Reuters