Gold above one-week low as safe-haven demand flows in

Gold above one-week low as safe-haven demand flows in


A worker loads 12,5 kilogram gold ingots onto a trolley ready for distribution in Krasnoyarsk, Russia.

Andrey Rudakov | Bloomberg | Getty Images

Gold prices edged higher on Tuesday as concerns over the economic damage from surging cases of the Delta coronavirus variant, and a dip in U.S. Treasury yields, pushed the metal above a one week low hit in the last session.

Spot gold was up 0.3% at $1,818.43 per ounce by 1024 GMT, having hit a low of $1,794.06 in the previous session. U.S. gold futures gained 0.5% to $1,817.30.

“The great problem currently is the fear about the economic impacts of the Delta variant of the coronavirus. And after Japan took severe measures concerning the Olympic Games, markets got more and more nervous … (resulting) in a flight into the safe havens,” said Quantitative Commodity Research analyst Peter Fertig.

A surge in coronavirus cases across the United States and other countries has sent higher-risk assets tumbling.

Tokyo Olympics organizers on Sunday reported the first COVID-19 cases among competitors in the athletes’ village.

Gold, seen as a safe store of value, tends to benefit during times of political and financial uncertainty.

“Rapidly rising cases in Europe as well as in the United States prompted market participants to reduce risks in their portfolios,” said Julius Baer analyst Carsten Menke.

Benchmark 10-year Treasury yields touched a more than five-month low, reducing the opportunity cost of holding non-interest bearing gold.

A firm U.S. dollar also challenged gold’s appeal, as the currency held firm near 3-1/2-month highs. A stronger dollar makes gold more expensive for other currency holders.

“If the U.S. dollar is strengthening because the yields are falling due to flight into the safe haven then the impact (on gold) … could be only slightly positive or even negative, as we have seen,” Fertig added.

Elsewhere, platinum rose 0.2% to $1,077.42 per ounce, palladium gained 0.9% to $2,617.98, and silver eased 0.1% to $25.18.

Gold prices were flat on Tuesday, as a slide in U.S. Treasury yields offset a firmer dollar amid investor concerns over a relentless surge of the Delta coronavirus variant that could threaten the outlook for global economic recovery.

Fundamentals

Spot gold was steady at $1,813.15 per ounce, as of 0057 GMT, after falling to a one-week low of $1,794.06 in the previous session.

U.S. gold futures edged up 0.3% at $1,813.80.

Benchmark 10-year Treasury yields were pinned near five-month lows. Lower bond yields reduce the opportunity cost of holding non-interest bearing gold.

But, making gold more expensive for holders of other currencies, the dollar held near a 3-1/2-month peak against its rivals.

Stocks on Wall Street fell as much as 2% on Monday, with the Dow posting its worst day in nine months, as a rise in worldwide coronavirus cases and increasing U.S. deaths drove investors out of risky assets.

Rising coronavirus cases across the United States and abroad fueled fears of a pandemic resurgence as the highly contagious Delta variant appeared to be taking hold.

Gold is often used as a safe store of value during times of political and financial uncertainty.

Japan’s core consumer prices rose 0.2% in June from a year earlier to mark the fastest annual pace in over a year, data showed on Tuesday, a sign the impact of global commodity inflation was gradually broadening.

U.S. Senate Democratic leader Chuck Schumer said on Monday he would set a procedural vote on a bipartisan $1.2 trillion infrastructure bill for Wednesday, increasing pressure on negotiators as they struggled with ways to pay for the cost of the measure.

Silver eased 0.1% to $25.18 per ounce, palladium was steady at $2,597.23, and platinum rose 0.3% to $1,077.98.



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