You are here
Gold eases as US dollar firms, vaccine progress weighs
[BENGALURU] Gold prices inched lower on Thursday, as a firmer US dollar and progress in Covid-19 vaccine developments offset concerns over spiking virus cases in the United States and hopes of more stimulus.
Spot gold fell 0.21 per cent to US$1,867.43 per ounce by 4.18am GMT, while US gold futures were down 0.4 per cent at US$1,866.60.
After falling for five straight sessions, the dollar index was up 0.2 per cent, making gold expensive for holders of other currencies.
"The focus here is fiscal stimulus...If somehow there is a sizeable stimulus package that is able to get passed, we may get gold higher, but the limiting factor would be a rise in yields," said DailyFx currency strategist Ilya Spivak.
"Dollar strength is a major headwind for gold."
US President-elect Joe Biden expressed hope on Wednesday that Republicans in the Congress would be more inclined to move forward on Covid-19 relief legislation after President Donald Trump leaves office in January.
Gold, which tends to benefit from stimulus measures from central banks as it is considered a hedge against inflation and currency debasement, has gained about 23 per cent this year.
However, prices are on track for the second week of declines.
Covid-19 vaccines from Pfizer and Moderna could be ready for US authorisation and distribution within weeks, setting the stage for inoculation to begin as soon as this year, US Health and Human Services Secretary Alex Azar said on Wednesday.
"Gold has the potential to take out support US$1,850-US$1,860 in the coming days and once that happens we will be looking at US$1,750-US$1,760 next," Mr Ilya said.
Investors are also awaiting US jobs figures due at 1.30pm GMT to discern the health of the economy.
Silver fell 0.5 per cent to US$24.20 per ounce. Platinum eased 0.5 per cent US$938.09, while palladium was down 0.3 per cent at US$2,322.53.