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Budget 2021

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Gold poised for best quarter in four years as virus fears persist

Spot gold was steady at $1,771.30 per ounce by 0306 GMT, just $7.76 shy of a near eight-year high of $1,779.06 hit last week. U.S. gold futures rose 0.2% to $1,783.80.

June 30, 2020 / 09:38 AM IST

Gold held close to a near eight-year peak on Tuesday, en route to its best quarter in more than four years, as worries over rising cases of the novel coronavirus and its economic fallout boosted safe-haven demand.

Spot gold was steady at $1,771.30 per ounce by 0306 GMT, just $7.76 shy of a near eight-year high of $1,779.06 hit last week. U.S. gold futures rose 0.2% to $1,783.80.

Bullion, with more than 12% gains this quarter, is on track for its best quarter since end-March 2016, and is also headed for a third straight monthly gain.

"Gold's main supports right now are negative real interest rates across the U.S. yield curve, and risk event hedging. In that, you can lump U.S. COVID-19 situation, and U.S.-China relations," said Jeffrey Halley, senior market analyst at OANDA.

A spike in COVID-19 cases in recent days has pushed some U.S. states to reverse re-openings and close businesses such as bars again to curtail its spread.

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COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

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.

How many types of vaccines are there?

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.

What does it take to develop a vaccine of this kind?

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.

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U.S. Federal Reserve Chair Jerome Powell said the outlook for the world's biggest economy is "extraordinarily uncertain" and will depend both on containing the disease and on the government's efforts to support the recovery.

Central banks worldwide have adopted aggressive stimulus measures and kept interest rates low, helping the non-yielding asset surge more than 16% this year.

Capping gold's advance were better-than-expected economic readings out of the U.S. and China, which lifted investors' appetite for riskier assets.

"The fact gold prices remain fairly constructive around risk-on is a bullish sign in its own right," said Stephen Innes, chief market strategist at financial services firm AxiCorp, in a note.

Elsewhere, palladium fell 0.5% to $1,895.06 per ounce, while platinum rose 0.2% to $807.46. Silver was steady at $17.85.
first published: Jun 30, 2020 09:32 am

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