Gold falls from 1-month high

Bengaluru, India

GOLD prices fell on Tuesday from a one-month high as equities gained on signs of a slowdown in fresh Covid-19 cases, but concerns over the economic fallout from the pandemic limited the losses.

Spot gold fell 0.5 per cent to US$1,654.26 per ounce by 3.35pm Singapore time, after rising to a one-month high of US$1,671.40 earlier in the session. The metal had risen as much as 2.8 per cent on Monday.

A pullback was expected, said Michael McCarthy, chief strategist at CMC Markets. "But it's pretty clear that the trend in the short term is upward. A lift in equities is not weighing on gold because it rallied overnight alongside equities.

"There appears to be a serious breakdown in the inverse correlation between gold and growth assets," he added.

Asian shares followed gains in US stock markets on signs of a slowdown in novel coronavirus deaths.

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The United States is bracing for its toughest week yet as the death toll climbs above 10,000.

Across the Atlantic, British Prime Minister Boris Johnson has entered intensive care following the worsening of his Covid-19 symptoms.

Supporting bullion were reports that Japan's Prime Minister Shinzo Abe was set to announce a state of emergency for the capital, Tokyo, and six other prefectures.

A low-interest environment and higher economic concerns could see gold break though the US$1,700 level in the coming weeks and months, Mr McCarthy said.

In a bid to pump money into economies hammered by the outbreak, central banks have been turning to quantitative easing, or large-scale purchases of government bonds and other financial assets.

On the technical front, gold prices will face resistance at US$1,680 and further at US$1,700 an ounce, said Jeffrey Halley, a senior market analyst at Oanda in a note.

US gold futures rose 0.9 per cent to US$1,709.40, extending a lead over London spot prices, signalling market worries that refinery closures and logistics constraints could hamper bullion shipments to the United States to meet contract requirements. REUTERS