Gold flat as dollar strength checks virus woes
Gold up 2.5% so far this week.
Gold was flat on Friday as a stronger dollar offset diminishing risk appetite over concerns of a second wave of coronavirus infections and a protracted economic recovery, while the metal was on track for its first weekly rise in four weeks.
Spot gold was unchanged at $1,727.72 per ounce, as of 0531 GMT. Bullion has risen about 2.5per cent so far this week. US gold futures fell 0.4 per cent to $1,732.60.
"An increase in Covid-19 cases has led to rising risk aversion, leading to a stronger US dollar, which in turn, has lowered gold prices," said National Australia Bank economist John Sharma.
The dollar index extended gains, making gold more expensive for holders of other currencies.
After a recent strong rally, US stocks fell more than 5 per cent on Thursday, in their worst day since mid-March. Asian equities slumped on fears of resurgence in coronavirus cases.
Any rallies in gold today will be limited as it looks like the downward correction in stocks still has some way to go, said Jeffrey Halley, a senior market analyst at OANDA.
However, the reassertion by the US Federal Reserve of its extremely dovish stance and the monetary policy globally should be supportive for gold, he added.
Earlier this week, Fed officials announced the need to keep the key interest rate near zero through at least 2022, and vowed to support US economy's "long road" to recovery.
Gold, which pays no interest, tends to benefit from lower interest rates as it reduces the opportunity cost of holding bullion.
Holdings of world's largest gold-backed exchange-traded fund, SPDR Gold Trust , rose 0.5 per cent to 1,135.05 tonnes on Thursday.
Palladium rose 0.2 per cent to $1,925.34 per ounce, while silver declined 1 per cent to $17.54.
Platinum climbed 1.3per cent to $821.37, but was set for its largest weekly fall since April. - Reuters
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