Gold prices firmed near an eight-year peak on Wednesday, as demand for the safe-haven metal was boosted by worries about the global economic impact of surging coronavirus infections in many countries.
Spot gold was up 0.2% at $1,783.52 per ounce by 0555 GMT, after hitting its highest level since early October 2012 at $1,785.46 in the previous session.
U.S. gold futures rose 0.1% to $1,802.20.
"Gold as a bond alternative and as a general hedge is still dominant. The macro-factor driving this right now is that there is still a high degree of uncertainty about global growth outlook going forward," said IG Markets analyst Kyle Rodda.
"On top of this, while inflation expectations have picked-up a little, markets are betting that policymakers will continue to do what they can to suppress yields in order to stimulate economies and support financial conditions."
Frequently Asked Questions
A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.
There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.
Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.
Lower bond yields reduce the opportunity cost of holding non-interest bearing gold.
A spike in U.S. coronavirus cases in the recent days has cast a shadow on hopes for a quicker economic recovery, driving inflows into safe-haven assets.
U.S. Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell pledged to do more for the economy as it battles the virus outbreak, which has infected more than 10.48 million people worldwide so far.
However, recent better-than-expected economic readings provided some relief to nervous investors, which buoyed risk appetite in Asian equities.
Focus now shifts to the U.S. Institute for Supply Management's purchasing managers' index (PMI) for manufacturing due later in the day.
On the technical front, spot gold may test a resistance at $1,789 per ounce, a break above which could lead to a gain into $1,795-$1,806 range, Reuters technical analyst Wang Tao said.
Palladium fell 0.7% to $1,915.90 per ounce, while platinum rose 1% to $824.54 and silver gained 0.6% at $18.24.