Sat, 02-Jul-2022
Tuesday 12 May 2020 , 9:13 am

Gold Rises on Fears About Second Wave of Infections

Globally, an estimated $15 trillion worth of stimulus has already been unleashed to cushion the blow from the pandemic.
By SIN Bureau
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Gold rose on Tuesday on growing fears of a coronavirus resurgence in some countries and prospects of Sino-U.S. tensions flaring further, though gains were capped by a stronger dollar.

Spot gold was up 0.4% at $1,702.69 per ounce by 0804 GMT. U.S. gold futures climbed 0.5% to $1,705.90 per ounce.

The new wave of infections is “priced through the fact that markets are looking at negative (U.S.) interest rates,” ANZ analyst Daniel Hynes said to Reuters, adding that the market was expecting some additional support from the Federal Reserve.

However, “we have (also) had a little bit of a rally in the U.S. dollar which certainly crimps investor appetite.”

Market participants are increasingly becoming anxious about a second wave of infections as more countries around the world gradually ease restrictions in an effort to restart their economies.

China’s health authority said the reappearance of local clusters of virus cases in recent days indicate that counter-epidemic measures cannot be relaxed yet.

Meanwhile, the dollar index .DXY climbed to a more than two-week high against key rivals on higher safe-haven demand and bond yields, making gold costlier for investors holding other currencies.

Fed officials talked down the prospect of negative rates, after traders in futures tied to the policy rate last week began pricing in — for the first time ever — a small chance of negative interest rates next year.

Highlighting strained relationship with China, U.S. President Donald Trump said he was “not interested” in re-negotiating the “Phase 1” trade deal after a Chinese state-run newspaper indicated discontent about it in Beijing.

“The U.S.-China trade issues are back into the picture,” said Hareesh V, head of commodity research at Geojit Financial Services.

Japan could end a state of emergency in many regions this week if new virus infections are under control.

Globally, an estimated $15 trillion worth of stimulus has already been unleashed to cushion the blow from the pandemic.

Meanwhile, SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.05% to 1,081.07 tonnes on Monday.

Among other precious metals, palladium slipped 1.5% to $1,866.07 per ounce and silver fell 0.4% to $15.48, while platinum rose 1.3% to $766.89.

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Neha Mule

Neha writes articles on sectors including medicine, food, materials, and science & technology. A qualified statistician, she has the ability to observe and analyze the trends in global markets and write compelling articles that help CXOs in decision making. She is a bookworm and loves to read fiction, lifestyle, science and technology. Neha comes with 6 years of experience in content writing and editing that involves blog writing, preparation of study materials and OERs.

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