Gold loses ground as traders regain their appetite for risk

Bengaluru — Gold prices fell on Monday as risk appetite improved on further stimulus from Japan’s central bank and countries considering easing of coronavirus-led restrictions, though bullion’s losses were limited on worries over a global recession.

Spot gold eased 0.3% to $1,722.61/oz by 2.59am GMT. US gold futures rose 0.3% to $1,740.90.

“The peaking [of the] virus will be the theme of the week. Should be positive for equities but will sap the upside momentum for gold for now,” said Jeffrey Halley, senior market analyst at Oanda.

“Only the US Federal Reserve really matters, and if the world thinks we’ve reached peak virus and countries are partially reopening, any extra stimulus will get drowned in Covid-19 noise.”

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

Asian shares inched higher ahead of a busy week for earnings and central bank meetings. The Bank of Japan (BoJ) ramped up risky asset purchases and pledged to buy unlimited amounts of government bonds to combat the economic fallout from the coronavirus epidemic.

Against key rivals, the dollar inched lower, but hovered close to a near three-week peak it touched on Friday. A stronger dollar makes gold costlier for investors using other currencies.

Various nations, including the US, are on track to ease certain restrictions and allow businesses to reopen, raising investors’ hopes of higher number of testing kits and more drug trials.

Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.6% to 1,048.31 tonnes on Friday.

Palladium rose 0.7% to $2,038.16/oz, while platinum gained 0.9% to $766.90 and silver edged higher by 0.3% to $15.28.

Reuters