Gold prices fell on Monday as equities gained on improved risk appetite boosted by fresh stimulus from the Japanese central bank and countries planned easing of coronavirus-led lockdowns, but continued worries over a global recession capped losses.
Spot gold eased 0.3% to $1,722.06 per ounce by 0606 GMT. US gold futures rose 0.3% to $1,740.90.
“The peak(ing) (of the) virus will be the theme of the week. Should be positive for equities but will sap the upside momentum for gold for now,” said Jeffrey Halley, senior market analyst at OANDA.
“… Only the US Federal Reserve really matters, and if the world thinks we’ve reached peak virus and countries are partially reopening, any extra stimulus will get drowned in COVID-19 noise.”
Gold tends to benefit from widespread stimulus measures as it is often seen as a hedge against inflation and currency debasement.
Asian shares bounced back on fresh stimulus from Japan’s central bank, with Chinese shares climbing higher on a drop in new coronavirus cases in the country.
The Bank of Japan ramped up risky asset purchases and pledged to buy unlimited amounts of government bonds to combat the economic fallout from the coronavirus epidemic.
Against key rivals, the US dollar inched lower, but hovered close to a near three-week peak it touched on Friday. A stronger dollar makes gold costlier for investors using other currencies.
Various nations, including the United States, are on track to ease certain restrictions and allow businesses to reopen, raising investors’ hopes of higher number of testing kits and more drug trials.
Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust , rose 0.6% to 1,048.31 tonnes on Friday.
Spot gold may test a support at $1,703 per ounce, a break below could cause a fall to $1,677, according to Reuters technical analyst Wang Tao.
Palladium rose 0.2% to $2,029.84 per ounce, while platinum gained 1% to $766.96 and silver edged higher by 0.3% to $15.29.
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