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Gold climbs as weaker dollar bolsters appeal

Gold climbs as weaker dollar bolsters appeal

Gold rose on Thursday on a softer dollar, consolidating further above the key $1,900 level, with an ultralow interest rate environment and worries over global economic fallout from mounting COVID19 cases underpinning its safehaven appeal.

Gold rose on Thursday on a softer dollar, consolidating further above the key $1,900 level, with an ultra-low interest rate environment and worries over global economic fallout from mounting COVID-19 cases underpinning its safe-haven appeal.

Spot gold was up 0.6% at $1,928.94 per ounce by 0516 GMT, a day after slipping below the $1,900 level in choppy trade. U.S. gold futures eased 0.5% to $1,939.79.

“The fall that took gold below $1,900 has flushed out a lot of weak longs and it looks like now we’re going for a bit of consolidation and gold is preparing for another move higher,” said Michael McCarthy, chief strategist at CMC Markets.

“The outlook remains positive in a lower interest rate environment, particularly with the weakening U.S. dollar. The settings are unchanged, we’re seeing record amount of stimulus and have real fears about the risks to growth.”

The dollar slipped 0.2% against rivals, making gold cheaper for holders of other currencies.

Gold, which pays no interest, also benefits from low interest rates as this reduces the opportunity cost of holding bullion.

Adding to worries over the economic toll from the pandemic, U.S. Federal Reserve policymakers warned U.S. economic growth would be muted until the virus was contained.

“Gold also continues to garner support from the pandemic as it continues to impact global economic growth and is dovish for central bank policy,” Phillip Futures’ analysts said in a note.

Massive money-printing by global central banks have helped gold rise about 28% so far in 2020 as the metal is considered a hedge against currency debasement and inflation.

Investors are now waiting for a breakthrough in stalled U.S. stimulus talks while keeping a close watch on frayed U.S.-China ties ahead of key trade talks scheduled on Aug. 15.

Elsewhere, silver rose 1.2% to $25.86 per ounce, platinum gained 0.7% to $937.35 and palladium climbed 1.4% to $2,159.24.

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

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  • First Published: August 13, 2020, 11:16 AM IST
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