Gold steadies as virus fears offset equity rally - GulfToday

Gold steadies as virus fears offset equity rally


Picture used for illustration. File

Gold held steady on Monday as lingering fears over a surge in coronavirus cases countered pressure from stronger equities, with focus turning to U.S. services sector data due later in the day.

Spot gold was up 0.1% at $1,777.30 per ounce by 0949 GMT. U.S. gold futures fell 0.3% to $1,784.30 per ounce.

In the first four days of July, 15 U.S. states have reported record increases in new cases of COVID-19, causing some to halt plans to ease lockdowns. Cases continued to soar in countries including India, Australia and Mexico.

"Some (riskier) asset classes are showing optimism over the revival of the U.S economy, but with U.S.-China relations and the shape of the recovery, sentiment for gold will be positive," said Jigar Trivedi, commodities analyst at Mumbai broker Anand Rathi Shares.

Most bullish factors for gold have already been discounted but a worsening of U.S.-China trade relations may provide some buying momentum, he added.


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Global shares hit a four-week high as Chinese activity rebounded, while investors eyed U.S. services sector activity data for June due later.

Economists polled by Reuters expect the Institute for Supply Management's (ISM) non-manufacturing data to rise to 50 in June from 45.4, signalling a revival in economic activity.

But increased stimulus measures globally to cushion economies from the fallout of coronavirus-induced lockdowns and lower real yields have lifted non-interest bearing gold 17% so far this year.

"With an increasing number of U.S. states imposing lockdowns again, it should result in the Federal Reserve's balance sheet continuing to grow and interest rates kept low," Phillip Futures said in a note.

That in turn would provide underlying support for gold markets, it said.

On the technical front, spot gold is biased to break resistance at $1,778 per ounce, said Reuters technical analyst Wang Tao.

Palladium fell 0.8% to $1,907.84 per ounce, while platinum rose 1% to $808.12 per ounce. Silver gained 0.5% to $18.13 per ounce.



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