Gold inches up on muted dollar, mounting virus cases

Bengaluru

GOLD edged up on Wednesday, buoyed by a softer dollar as investors weighed the logistical challenges surrounding the mass roll-out of a potential Covid-19 vaccine, with a surge in new infections boosting bets of further economic support.

Spot gold rose 0.1 per cent to US$1,878.54 per ounce by 0721 GMT.

US gold futures were little changed at US$1,876.40.

The dollar index was down 0.1 per cent, making gold more attractive to holders of other currencies.

"Coronavirus cases continue to rise in US and Europe and we will require further monetary and fiscal measures... In that sense, the overall backdrop for gold has not turned negative," said Harshal Barot, senior research consultant for South Asia at Metals Focus.

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"But since risk sentiment has improved, we are going to see certain liquidations coming in."

Federal Reserve policymakers said on Tuesday that surging coronavirus cases threatened to slow US economic growth once more in coming months and that more targeted government aid was needed.

California and several states across the US Midwest tightened restrictions again as infections spiked.

Spot gold fell 4.6 per cent on Monday, its biggest daily fall since Aug 11, after drugmaker Pfizer said its Covid-19 vaccine was more than 90 per cent effective based on initial trial results, boosting risk appetite.

However, the breakthrough has brought to light the logistical challenges of distributing hundreds of millions of doses once it becomes available.

"As people become more aware about the dimensions or the details of the vaccine, that (equities) rally could wane," said Michael Langford, executive director at corporate advisory and consultancy firm AirGuide.

Meanwhile, concerns rose about a rough transition of power in the United States as President Donald Trump pursued a flurry of lawsuits challenging the election results.

Silver rose 0.3 per cent to US$24.29 per ounce. Platinum gained 0.3 per cent to US$885.45, while palladium was up 0.4 per cent at US$2,463.64. REUTERS