Gold firms on softer dollar, concerns over rising virus cases

Agencies | London

The Daily Tribune – www.newsofbahrain.com

Gold prices edged higher on Wednesday, supported by a softer dollar, while concerns about surging COVID-19 cases in the United States and logistical challenges over the mass roll-out of a potential vaccine further bolstered the metal’s appeal.

Spot gold rose 0.3% to $1,882.06 per ounce by 0320 GMT.

U.S. gold futures were up 0.2% at $1,880.20.

The dollar index was down 0.1% against a basket of currencies, making gold more attractive to other currency holders.

“The initial vaccine being proposed isn’t realistic... COVID-19 is still a problem and ultimately there will be further forms of stimulus and this will be positive for gold and negative for the dollar,” said Michael Langford, executive director at corporate advisory and consultancy firm AirGuide.

Federal Reserve policymakers said on Tuesday that surging coronavirus cases threatened to slow the U.S. economic growth once more in coming months and that more targeted government aid was needed.

California and several states across the U.S. Midwest tightened restrictions again as infections spiked.

Spot gold fell 4.6% on Monday, its biggest daily fall since Aug. 11, after drugmaker Pfizer said its COVID-19 vaccine was more than 90% effective based on initial trial results, boosting risk appetite.

However, the breakthrough has brought to light the logistical challenges of distributing hundreds of millions of doses once it becomes available.

“On reflection, the question marks about the production, distribution and actual performance of the vaccine were enough to convince investors that in the short term, central banks and governments are likely to keep fiscal and monetary policies uber-easy,” ANZ said in a note.

Gold, which has risen 24% so far this year, is considered a hedge against inflation and currency debasement amid the unprecedented levels of stimulus globally.

Silver climbed 0.8% to $24.40 per ounce. Platinum rose 0.6% to $888.66, while palladium was up 0.5% at $2,465.95.