Gold bars and others precious metals are pictured at the Agosi factory in Pforzheim, southwestern Germany. Picture: AFP/PATRICK HERTZOG
Gold bars and others precious metals are pictured at the Agosi factory in Pforzheim, southwestern Germany. Picture: AFP/PATRICK HERTZOG

Bengaluru — Gold edged higher on Wednesday as additional stimulus from the US eased concerns over the economic effects of the coronavirus and halted a trend of selling precious metals for cash, though a strong dollar capped gains.

Spot gold rose 0.1% to $1,529.69/oz by 0305 GMT, having risen about 1% earlier in the session. US gold futures gained 0.3% to $1,530.80/oz.

IG Markets analyst Kyle Rodda said the steps taken by the US central bank to support liquidity is, in turn, helping the metal. “That has boosted sentiment a little and we saw the unwinding of some of that behaviour, which is ‘sell gold among everything else to find cash’,” he said.

The US Federal Reserve (Fed) said on Tuesday it would reinstate a funding facility used during the 2008 financial crisis to get credit directly to businesses and households as fears over a liquidity crunch due to the virus have grown in recent days. Meanwhile, the Trump administration pursued a $1-trillion stimulus package that could deliver $1,000 cheques to Americans within two weeks to cushion the economy.

“[However,] the overall strong position of the dollar has limited further gains for gold,” said Michael McCarthy, chief strategist at CMC Markets.

The US dollar hovered near a four-week high scaled on Tuesday, making gold costlier for investors holding other currencies. Among countries and central banks providing stimulus to their virus-hit economies, Britain launched a new lending scheme to provide short-term bridging finance for large businesses hurt by the epidemic, which will be run and funded by the Bank of England.

Underscoring the economic strain from the virus, a survey showed that the mood among German investors slumped in March to levels last seen at the beginning of the world financial crisis in 2008 due to alarm over its effects on Europe’s largest economy. Elsewhere, palladium rose 1.1% to $1,661.11/oz, while platinum gained 1.4% to $670.72. Silver rose 1.4% to $12.76 after eight straight sessions of falls.

Reuters