Gold inches higher as a weaker dollar eclipses optimism

Bengaluru — Gold prices edged higher on Wednesday as a weaker dollar eclipsed optimism stemming from some plans to ease coronavirus-led restrictions gradually, while investors awaited the US Federal Reserve’s policy decision later in the day.

Spot gold rose 0.1% to $1,709.83/oz by 3.12am GMT. US gold futures rose 0.2% to $1,725.20/oz.

“There’s a movement out of the dollar because there’s a lot of uncertainty around an event like the Fed meeting, and that’s supporting a little bit of a lift in gold on an intraday basis,” said IG Markets analyst Kyle Rodda.

“We’ve got a lot of major events on the economic and corporate calendar in the next few days,” Rodda said, adding that this is leading to a heightened risk in the equities market.

The dollar slipped, having touched a two-week low in the previous session, as the slowing spread of the coronavirus and moves to reopen economies supported the investor mood, ahead of major central bank meetings.

Many countries tiptoed out of lockdowns and more parts of the US looked set to restart businesses.

Asian shares rose for a third consecutive session and oil prices jumped on the hope demand will pick up as countries look to ease restrictions, with eyes on the Fed’s policy statement due later in the day.

“With central banks increasing liquidity in financial markets, low-interest rates and rising money supply are all factors that are bullish for gold in the longer term,” Phillip Futures said in a note.

The Fed has slashed interest rates, resumed bond-buying and backstopped credit markets. Its statement on Wednesday could begin to clarify how long it intends to leave rates near zero.

Gold tends to benefit from widespread stimulus measures as it is often seen as a hedge against inflation and currency debasement.

US consumer confidence tumbled to near a six-year low in April as restrictions disrupted economic activity and threw millions of Americans out of work.

Drawing the curtains on one of the most venerable names in precious metals trading, Bank of Nova Scotia (Scotiabank) told staff on Tuesday it would close its metals business, two sources familiar with the matter told Reuters.

Palladium rose 0.7% to $1,930.99/oz and platinum gained 0.7% to $776.98/oz, while silver was little changed at $15.19/oz.

Reuters