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Gold edges up as virus worries eclipse vaccine optimism
[BENGALURU] Gold prices edged higher on Thursday, after dropping over 1 per cent in the previous session, as concerns over the economic fallout from surging Covid-19 cases outweighed positive vaccine news.
Spot gold rose 0.3 per cent to US$1,869.51 per ounce by 3.39am GMT.
US gold futures were 0.4 per cent higher at US$1,869.30.
"Gold traders are trying to strike a balance between a positive vaccine news versus a rising number of coronavirus cases around the globe," said Margaret Yang, a strategist with DailyFx, which covers currency, commodity and index trading.
Although the vaccine may affect the medium to long-term trend of gold prices, monetary and fiscal stimulus are needed in the near-term to shelter the global economy, Ms Yang said.
European Central Bank president Christine Lagarde signalled further support for the economy on Wednesday as the pandemic intensified in Europe, with cases expected to spike in winter.
Gold tends to benefit from widespread stimulus measures from central banks because it is considered a hedge against inflation and currency debasement.
Risk appetite has been boosted by hopes of a successful vaccine, but analysts say it may take a long time before one becomes publicly available.
Gold prices have come under pressure after Monday's encouraging late-stage coronavirus vaccine trial data by Pfizer and BioNTech. Prices are down 4.2 per cent so far for the week.
"The reality is we are just holding above the support levels between US$1,850 and US$1,860 and a breach there would introduce some pretty serious downside potential," said Michael McCarthy, chief strategist at CMC Markets.
The US dollar index held steady near a one-week high hit on Wednesday.
Silver fell 0.1 per cent to US$24.23 per ounce. Platinum rose 0.1 per cent to US$866.25, while palladium was up 0.8 per cent at US$2,333.53.