Gold steady as stock rally offsets weaker dollar
Metal is hardly changed after snapping a three-session winning streak, as an equity rally balances support from a softer dollar
Bengaluru — Gold traded steady on Wednesday after snapping a three-session winning streak in the previous day, as a rally in equity markets on the hope of more stimulus offset some support from a weaker dollar.
Spot gold was unchanged at $1,727.65/oz by 2.59am GMT, after declining 0.7% on Tuesday. US gold futures fell 0.1% to $1,732.20.
“There are a lot of investors who bought gold as a hedge for stocks, but stocks are going up and they don’t see value in that now,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.
Asian shares vaulted to a near three-month high as the hope of more stimulus and further easing in social restrictions outweighed caution over a host of worries from the coronavirus to growing US civil unrest.
Governments and central banks around the world have unleashed unprecedented fiscal and monetary stimulus and other support for economies floored by the coronavirus pandemic.
Investors hope that the European Central Bank (ECB) will deliver additional stimulus, by about €500bn, when it meets on Thursday.
Helping gold, the dollar index was down 0.2%, trading at a more than two-month low.
Meanwhile, demonstrations against police brutality continued in the US, in spite of curfews.
Gold is often seen as an alternative investment during times of political and financial uncertainty.
There is not much pressure for gold going below the $1,700 level, Innes said.
Gold has gained about 19% since hitting a near four-month low of $1,450.98 in March.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose for a sixth consecutive session on Tuesday.
In other metals, palladium rose 1% to $1,968.20/oz, while platinum fell 0.3% to $836.25.
Silver fell 1.3% to $17.86, having hit its highest since February 25 on Monday.