Gold calms down after wild ride as investors weigh next steps

[SINGAPORE] Gold held above US$1,900 an ounce following wild swings as investors weighed the outlook for the metal's record-setting rally, tracking moves in bond yields, a weaker dollar, as well as an uptick in risk appetite.

Spot bullion steadied, while futures dropped after US stocks briefly surpassed their all-time closing high, curbing demand for haven assets. Gold had tumbled on Tuesday, then swung in a wide arc on Wednesday, as last-week's rally likely spurred some technical selling and profit taking.

Even with the correction in prices, gold and silver remain among the best performing commodities this year, aided by negative real yields and vast stimulus to combat the fallout from the coronavirus pandemic. Goldman Sachs Group has described gold as the currency of last resort amid an inflation threat to the US dollar, and forecast further gains above US$2,000 an ounce.

"Gold's roller-coaster ride is far from over as bond yields will likely remain volatile for the rest of the summer," said Edward Moya, senior market analyst at Oanda. "The relentless pace higher for gold will moderate but the outlook still warrants a strong stretch of fresh, record highs."

Spot gold traded 0.2 per cent higher at US$1,920.38 an ounce at 8.02am in Singapore. On Tuesday, prices dropped 5.7 per cent, the biggest one-day loss in seven years, following a rally to an all-time high of US$2,075.47 last week. Futures for December delivery declined 1 per cent to US$1,930.40 on the Comex in New York.

Silver for immediate delivery rose 0.3 per cent to US$25.5884 an ounce after a 2.9 per cent gain on Wednesday and 15 per cent slump on Tuesday.

BLOOMBERG