Gold Price Steadies As Spike In COVID-19 Cases Hits Equities

Gold prices steadied on Thursday as a spike in coronavirus cases dented demand for riskier assets though gains were capped by rival safe haven buying of the dollar. Spot gold was steady at $1,762.21 per ounce at 1114 GMT (4:44 pm in India), trading below its highest since October 2012 at $1,779.06, hit on Wednesday. US gold futures fell 0.2 per cent to $1,772.20 per ounce.

World stocks spluttered to their lowest level in over a week, as a surge in US coronavirus cases and a warning by the International Monetary Fund (IMF) of a nearly 5 per cent plunge in the global economy this year hit the bulls again.

While negativity in the stock markets is propping up gold, "markets are very averse to the re-introduction of lockdowns but whenever we see these kind of movements, it does tend to favour the dollar", said OANDA analyst Craig Erlam.

The US dollar held firm on Thursday as rising trade tensions coupled with fears of a second wave of coronavirus fuelled demand for the safe-haven currency.

The surge in coronavirus infections has kept investors on tenterhooks with Australia and three US states reporting a spike in cases, as well as in Brazil, Latin America and India, the world's second biggest bullion consumer.

The US imposed tariffs on $3.1 billion worth of European goods including black olives, beer and gin.

"The fact that gold has come under slight pressure nonetheless could be a sign of renewed forced selling to generate liquidity, as has often happened during phases of risk aversion in the past three months," Commerzbank said in a note.

"What is more, it is noticeable that falls in the gold price are still being viewed by investors as buying opportunities... we therefore regard the latest weakness in the gold price as temporary and envisage new highs in the near future."

In other precious metals, palladium was steady at $1,864.33 per ounce, platinum gained 0.6 per cent to $804.76 and silver rose 0.1 per cent to $17.54 per ounce.