Gold Refinery gold shavings. Picture: AFP PHOTO/OZAN KOSE
Gold Refinery gold shavings. Picture: AFP PHOTO/OZAN KOSE

Bengaluru — Gold steadied near a more than eight-year high on Wednesday, as the worry over surging Covid-19 cases and the hope of more stimulus measures from the US Federal Reserve lifted demand for the safe-haven metal.

Spot gold was little changed at $1,792.79/oz by 2.41am GMT, after hitting its highest since November 2011 at $1,796.93 on Tuesday, just a few dollars away from the key $1,800 level. US gold futures eased 0.2% to $1,805.70.

“The main focus continues to be on the US. If the curve continues to steepen and the virus unabated, we are going to break $1,800 just for the fact that the Fed will have to be forced to add more stimulus,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.

The US coronavirus outbreak crossed a grim new milestone of more than 3-million confirmed cases as more states reported record numbers of new infections.

Compounding economic concerns, the European Commission on Tuesday forecast the eurozone would drop deeper into recession in 2020 and rebound less steeply in 2021 than previously thought.

“The health, financial and economic uncertainties generated by the Covid-19 pandemic and its aftermath are likely to continue to support gold’s rally well into 2021, but at a reduced level,” HSBC analysts said in a note.

Fed officials expressed concern that the surge in Covid-19 cases threatens to pinch consumer spending and job gains. One Fed policymaker pledged more support ahead from the US central bank. Gold tends to benefit from widespread stimulus measures from central banks because it is widely viewed as a hedge against inflation and currency debasement.

Indicative of sentiment, holdings of SPDR Gold Trust rose 0.7% on Tuesday. Weighing on gold, the dollar index rose 0.1%. Palladium gained 0.3% to $1,921.69 per ounce and platinum was steady at $835.45, while silver lost 0.1% to $18.28.

Reuters

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