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Gold edges up on Delta virus threat, lower US bond yields

Spot gold was up 0.1% at $1,812.83 per ounce, as of 0243 GMT, after falling 1% in the previous session.

July 19, 2021 / 08:49 AM IST

Gold prices edged higher on Monday, lifted by a retreat in U.S. Treasury yields and concerns that a surge in coronavirus cases could dampen global economic recovery, though an uptick in the dollar limited gains for the safe-haven metal.

Spot gold was up 0.1% at $1,812.83 per ounce, as of 0243 GMT, after falling 1% in the previous session.

U.S. gold futures eased 0.1% to $1,813.70.

”Covid-driven risk aversion is driving Asian markets today after a weak finish on Wall Street on Friday,” said Jeffrey Halley, a senior market analyst at OANDA.

”Some short-covering is providing modest support to gold, but it not displaying any clear momentum in either direction.”

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Sentiment in wider financial markets remained weak as investor risk appetite was soured by growing inflationary pressures and a relentless surge in coronavirus cases. [MKTS/GLOB]

Many countries, particularly in Asia, are struggling to curb the highly contagious Delta variant of the coronavirus and have been forced into taking lockdown measures.

Gold is used as a safe investment during times of political and financial uncertainty.

Benchmark 10-year Treasury yields dropped to a near two-week low, reducing the opportunity cost of holding non-interest bearing gold.

However, safe-haven gains for the U.S. dollar limited gold’s appeal, as the dollar index strengthened 0.1% towards a three-month high against its rivals. [USD/]

”Negative real yields appear to be driving gold prices in the face of a stronger USD. We expect the U.S. dollar to weaken as other central banks hike rates,” ANZ analysts said in a note.

”Inflows in gold-and silver-backed ETFs are steady as talk of fiscal tightening increases. Lean speculative positioning in both gold and silver leaves room for a price rise.”

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.6% to 1,028.55 tonnes on Friday, the lowest since May 14. [GOL/ETF]

Elsewhere, silver fell 0.6% to $25.50 per ounce, palladium rose 0.2% to $2,635.65, and platinum eased 0.2% to $1,100.55.
Reuters
first published: Jul 19, 2021 08:50 am

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