Bengaluru — Gold eased on Thursday as investors booked profits from a strong rally, but held on to a near nine-year high due to US-China tensions and bets on more global stimulus to support pandemic-hit economies, which could fuel inflation.

Gold was down 0.2% at $1,867.36/oz by 3.33am GMT, after hitting its highest since September 2011 at $1,876.16 in early Asian trade. US gold futures rose 0.1% to $1,867.

“With tension between the US and China rising, US bond yields continuing to edge lower, and a weaker dollar very much in evidence, the case for higher gold prices remains strong,” said Jeffrey Halley, a senior market analyst at Oanda.

“Most likely we’re seeing some short-term profit-taking in Asia before the uptrend resumes in European hours.”

In a marked escalation between the world’s two biggest economies, the US gave China until Friday to close its consulate in Houston amid accusations of spying, which also hit risk sentiment.

Hopes for another round of US stimulus measures also helped gold, which is considered a hedge against inflation and fears of currency debasement. The dollar index held near a more than four-month low hit in the last session.

“The spread of the virus and attendant impact on economic growth, and rising geopolitical tensions are leading investors to seek safe-haven assets like gold,” said National Australia Bank economist John Sharma.

Coronavirus cases continued to surge in the US, while more than 15.01-million people have been infected by the virus globally.

Elsewhere, silver retreated sharply, falling 2.2% to $22.53/oz, having rallied to a near seven-year high, helped by hopes for a revival in industrial activity. Platinum dropped 1.2% to $910.14, while palladium slipped 0.5% to $2,136.17.

“We see demand contracting for both palladium and platinum, flipping the platinum market balance to positive, while narrowing the palladium deficit,” ANZ analysts said in a note, adding weaker auto sales will be a drag.

Platinum and palladium are used in emission-controlling devices for automobiles.


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