Gold holds steady as dollar firms and stocks slide

Bengaluru — Gold prices were steady on Thursday, with the metal caught between a strengthening US dollar and a pullback in global equities, as worries over new coronavirus cases delaying economic recovery weighed on markets.

Spot gold was flat at $1,725.90/oz by 2.56am GMT. US gold futures were nearly unchanged at $1,734.70.

“We’re not really seeing a clear-cut catalyst for gold here. On the one hand, we’re getting a stronger US dollar because the recent comments from the Federal Reserve are supportive,” said DailyFx currency strategist Ilya Spivak.

“On the other hand, the absence of more stimulus has weighed on the sentiment and bond yields have fallen. These conflicting influences are keeping gold pretty well anchored.”

Safe-haven gains for the US dollar weighed on gold’s appeal, with the dollar index holding firm against a basket of major currencies.

Fed chair Jerome Powell said on Wednesday the US economy is beginning to recover from the worst of the coronavirus crisis, but with about 25-million Americans displaced from work and the pandemic ongoing, it will need more help.

The imposition of travel curbs in Beijing to stop a separate outbreak and surging new Covid-19 cases in several US states erased earlier confidence about a global economic recovery, sending global financial markets and US treasury yields lower.

The Bank of England is expected to announce an increase of at least £100bn in its bond-buying programme at its policy meeting due at 11am GMT.

Gold tends to benefit from widespread stimulus measures from central banks because it is widely viewed as a hedge against inflation and currency debasement.

Elsewhere, palladium gained 0.7% to $1,934.36/oz, while platinum dropped 0.9% to $811.50 and silver slipped 0.8% to $17.43.

Reuters

Source: businesslive.co.za