Gold slips amid gradual easing of Covid-19 restrictions

Bengaluru — Gold prices slipped on Wednesday as the gradual easing of some coronavirus-led restrictions by several nations raised prospects of more global economic activity, denting demand for the safe-haven metal.

Spot gold eased 0.3% to $1,700.66/oz by 3.15am GMT. US gold futures were steady at $1,710.90.

There is “optimism about the outlook for economies as we start to move away from lockdown”, said Michael McCarthy, chief strategist at CMC Markets.

“On the other side, we are seeing support for safe-haven yen and the US dollar is also holding up quite well. So, there clearly are different views about the outlook for the global economy.”

The dollar rose for a fourth consecutive session, making gold costlier for investors holding other currencies.

US President Donald Trump said on Tuesday the White House coronavirus task force will wind down as the country moves into a second phase that focuses on the outbreak’s aftermath, but he acknowledged there may be a resurgence of the virus as states loosen restrictions.

The uncertainty around US-China relations also prevailed as Trump urged China to be transparent about the origin of the virus amid his administration weighing new tariffs on Beijing.

“I don’t think it is widely interpreted as an imminent trade war. There is a lot of market doubt if the US would be bullish enough to spark another trade dispute while economies are recovering from the virus.”

CMC’s McCarthy said. Underscoring the deepening economic effect of Covid-19, data showed that the US services sector contracted for the first time in nearly 10-and-a-half years in April.

Bullion has gained 12% so far this year as the pandemic battered global economic growth and central banks poured in huge amounts of stimulus to prop up their economies.

Analysts said the fiscal and monetary impetus would boost gold in the longer term as it is also seen as a hedge against inflation and currency debasement. Investors now eye the US nonfarm payrolls data, due later in the week, and the weekly jobless claims numbers.

Elsewhere, palladium gained 0.4% to $1,808.73/oz, having touched a more than one-month low on Tuesday. Platinum eased 0.1% to $763.73 and silver slipped 0.1% to $15.01.

Reuters