Gold slips away from one-month high as dollar firms

Bengaluru — Gold prices eased on Tuesday from a one-month high as the US dollar gained strength on signs of a slowdown in fresh coronavirus cases, but concerns over the economic fallout from the pandemic provided a floor to bullion.

Spot gold was down 0.2% to $1,658.10 an ounce at 3.53am GMT, after rising to a one-month high of $1,671.40 earlier in the session. The metal rose as much as 2.8% on Monday.

A pullback was expected, said Michael McCarthy, chief strategist at CMC Markets, adding that the dollar’s strength was also putting pressure on gold.

“But it’s pretty clear that the trend in the short term is upward. A lift in equities is not weighing on gold because it rallied overnight alongside equities. There appears to be a serious breakdown in the inverse correlation between gold and growth assets,” McCarthy said.

The dollar held close to a near two-week high, while Asian shares followed gains in US stock markets on signs of easing coronavirus deaths.

New York governor Andrew Cuomo said on Monday that hospital admissions of coronavirus patients were down and the rate of the rise in deaths has levelled off in the hardest-hit state.

The US is bracing for its toughest week as the death toll climbs above 10,000, while across the Atlantic, British Prime Minister Boris Johnson has entered intensive care after his Covid-19 symptoms worsened.

Supporting bullion were reports that Japan’s Prime Minister Shinzo Abe was set to announce a state of emergency for the capital, Tokyo, and six other prefectures.

A low-interest environment and higher economic concerns could result in gold breaking through the $1,700 level in the coming weeks and months, CMC’s McCarthy said. In a bid to pump money into economies hammered by the outbreak, central banks have been turning to quantitative easing, or large-scale purchases of government bonds and other financial assets.

US gold futures rose 1% to $1,710.40, extending a lead over London spot prices, signalling market worries that refinery closures and logistics constraints could hamper bullion shipments to the US to meet contract requirements.

The increase came despite measures from the CME Group’s Comex Exchange to ease supply concerns and assurances from the London Bullion Market Association.

Palladium fell 0.6% to $2,142.72 an ounce, while platinum shed 0.3% to $733.20. Silver advanced 1.3% to $15.18 an ounce, having earlier touched a more than three-week high.

Reuters