Gold battles dollar as virus fears dampen risk appetite

[BENGALURU] Gold was little changed on Friday, with gains curbed by a stronger dollar, while growing concerns over a global economic slowdown due to a spike in Covid-19 infections underpinned the safe-haven metal.

Spot gold was up 0.1 per cent at $1,782.45 per ounce by 5.56pm GMT. US gold futures settled up 0.1 per cent at $1,784 per ounce.

"We do have a two-sided market at the moment. The dollar has been relatively strong of late as a result of this expectation that the Fed will move towards tapering, based on recent commentary," said David Meger, director of metals trading at High Ridge Futures.

"Other side, we still believe there's an underlying support in this gold market right now. We're starting to see some drags from Delta on the global economic recovery."

Worries over a slowing economic recovery and possible tapering from the US Federal Reserve dented appetite for riskier assets.

But the dollar also benefitted from safe-haven interest, pushing the currency to a nine-and-a-half-month high, making gold more expensive for other currency holders.

Against the backdrop of recent tapering hints from the US central bank, the spotlight shifts to the Fed's annual get-together next week in Jackson Hole, Wyoming, which could shed further light on monetary strategy and timeline.

"As soon as the Fed announced that it will start to reduce its bond purchases, an important obstacle for the gold price should disappear," Commerzbank analysts said in a note.

"During the further course of the year it should benefit from the comparatively cheap valuation of gold and the (record low) real yields."

Elsewhere, silver fell 0.8 per cent to $23.05 per ounce, en route to a third straight weekly decline.

Palladium dropped 1.6 per cent to $2,276.17 and was on course for its worst week since March 2020, falling about 14 per cent.

Platinum jumped 2.1 per cent to $994.18, but was down 3 per cent for the week.

REUTERS