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Gold flat as dollar strength checks concerns over virus case spike

Brijesh Patel /Bengaluru
Filed on June 18, 2020
US gold futures were mostly unchanged at $1,736.20 per ounce. - Reuters

Spot gold neutral in $1,708-$1,730 range.

Gold prices were steady on Thursday, with the metal caught between a strengthening US dollar and a pullback in global equities, as worries that new coronavirus cases could jeopardise an economic recovery weighed on markets.

Spot gold was flat at $1,726.63 per ounce by 0500 GMT and US gold futures were mostly unchanged at $1,736.20 per ounce.

"We're not really seeing a clear-cut catalyst for gold here. On the one hand, we're getting a stronger US dollar because the recent comments from the Federal Reserve are supportive," said DailyFx currency strategist Ilya Spivak.

"On the other hand, the absence of more stimulus has weighed on the sentiment and bond yields have fallen. These conflicting influences are keeping gold pretty well anchored."

Safe-haven gains for the US dollar weighed on gold's appeal, with dollar index holding firm against a basket of major currencies.

Fed Chair Jerome Powell said on Wednesday the US economy is beginning to recover from the worst of the coronavirus crisis, but with some 25 million Americans displaced from work and the pandemic ongoing, it will need more help.

The imposition of travel curbs in Beijing to stop a separate outbreak and surging new Covid-19 cases in several US states erased earlier confidence about a global economic recovery, sending global financial markets and US Treasury yields lower.

Bank of England is expected to announce an increase of at least 100 billion pounds ($125 billion) in its bond-buying programme at its policy meeting due 1100 GMT.

On the technical front, spot gold looks neutral in a range of $1,708 to $1,730 per ounce, and an escape could suggest a direction, said Reuters technical analyst Wang Tao.

Elsewhere, palladium gained 0.9per cent to $1,939.39 per ounce, while platinum dropped 0.6per cent to $814.04 and silver slipped 0.7per cent to $17.46. - Reuters

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