Rising virus cases and pullback in US yields lift demand for gold

Bengaluru — Gold prices rose on Monday as a retreat in US Treasury yields and worries over surging Covid-19 cases in some countries boosted the metal’s appeal, while palladium held firm after surpassing the $3,000-per-ounce level in the previous session.

Spot gold was up 0.3% at $1,773.90 per ounce by 6.18am. Trading in Asian hours was low due to public holidays in China and Japan. US gold futures rose 0.4% to $1,773.90 per ounce.

“The pandemic situation in Japan and India remains a key concern among market participants, so that’s driving up the demand for safe-haven assets, including gold,” said Margaret Yang, a strategist at DailyFX, adding that retreating US Treasury yields lent further support.

Benchmark US 10-year Treasury yields retreated after hitting their highest in nearly two weeks last week. Lower bond yields reduce the opportunity cost of holding non-interest bearing gold.

India on Monday reported more than 300,000 new coronavirus cases for a twelfth consecutive day, taking its overall caseload to just shy of 20-million.

The dollar index , meanwhile, hovered close to its highest level in nearly two weeks hit earlier in the day against its rivals.

Investors now look forward to a raft of US economic data this week, including the ISM manufacturing survey and April payroll numbers, for further clues about recovery in the world’s largest economy.

On the technical front, “gold has resistance at $1,790 an ounce, followed by a double top and the 100-day moving average in the $1,800 an ounce area. Support is nearby between $1,755 and $1,760 an ounce,” Oanda senior market analyst Jeffrey Halley said in a note.

Elsewhere, autocatalyst metal palladium rose 0.6% to $2,953.19 per ounce, after hitting an all-time high of $3,007.73 per ounce on Friday over supply concerns.

Silver was up 0.3% at $25.97 per ounce. Platinum rose 0.5% to $1,204.63.

Reuters