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Gold flat as virus fears offset gains in equities

Positive US jobs, Chinese services data support stocks; physical demand continues to wane in India, China

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Gold showrooms in India have opened after the government eased a nationwide lockdown, but customers have been put off by higher prices.

Bengaluru

GOLD prices were little changed on Friday as worries over an accelerating number of coronavirus cases countered a fillip to risk sentiment from positive US and Chinese economic data.

Spot gold was mostly unchanged at US$1,774.75 per ounce by O931GMT. Most US markets are closed on Friday ahead of Independence Day on July 4. US gold futures eased 0.3 per cent to US$1,785.40 per ounce.

"Central bank easing policies and uncertainty surrounding the second wave are sustaining gold prices," Bank of China International analyst Xiao Fu said, adding that despite a positive US jobs report, more data was needed to suggest the economy was on a strong footing.

Gold will likely trade in a tight range, but remains well supported above US$1,750 an ounce, Xiao Fu said.

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Cases of coronavirus continued to increase globally with more than 10.89 million people infected, while the United States reported a new daily global record number of cases.

"Geopolitical considerations are also to the fore... with a holiday in the United States, and the weekend upon us, some haven-directed buying of gold is definitely evident," said Jeffrey Halley, a senior market analyst at Oanda.

Escalating political tensions, more than 75 members of the US Congress sent a letter to President Donald Trump urging him to make a formal determination on whether China's treatment of Muslim Uighurs and other groups constituted an atrocity.

Indicative of sentiment, holdings of SPDR Gold Trust, rose 0.8 per cent to 1,191.47 tonnes on Thursday.

But stemming gains in bullion, data showing a recovery in China's services sector and a record addition of jobs to the US economy in June, helped European stocks to hold near more than a three-week high.

Palladium fell 0.5 per cent to US$1,892.02 per ounce, while platinum rose 0.45 per cent to US$806.60 per ounce, set for its first weekly gain in six weeks.

Silver gained 0.3 per cent to US$17.95 per ounce, heading for its fourth consecutive weekly gain.

Physical gold demand in top consumers China and India continued to struggle due to the Covid-19 pandemic this week, while investment activity ticked up in Singapore and Japan.

Chinese discounts rose to US$20-25 an ounce over benchmark spot prices from US$10-20 last week. "Most physical businesses are still down. There's only some trading on the Shanghai Gold Exchange," said Peter Fung, head of dealing at Wing Fung Precious Metals.

Global spot gold prices hit a near eight-year peak of US$1,788.96 this week.

"People who lost jobs are selling their gold," said Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS.

In Hong Kong, gold was sold at US$0.50 an ounce discounts to a US$0.50 premium.

China's May net gold imports via Hong Kong fell below exports for the second straight month in May as domestic supply remained abundant.

In India, "jewellery stores have resumed operations, but retail buyers aren't making purchases due to higher prices", said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.

Discounts rose to about US$22 an ounce over official prices, including 12.5 per cent import and 3 per cent sales taxes, from US$18 last week.

India's gold imports plunged 86 per cent year-on-year in June amid coronavirus lockdowns.

Meanwhile, activity picked up in Singapore, where gold was sold at US$0.80-US$1.50 per ounce premiums. REUTERS

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