Gold. Picture: REUTERS
Gold. Picture: REUTERS

Bengaluru — Gold prices held steady near record highs on Tuesday as worries over the global economic fallout from mounting Covid-19 cases offset pressure from a rebound in the US dollar.

Spot gold was steady at $1,976.36 an ounce by 2.30am GMT, $8.30 shy of the high hit in the previous session. US gold futures rose 0.3% to $1,993.

“The coronavirus problem is going to be with us for a while. It seems that economies around the world will be fragile for an extended period of time,” said Edward Meir, analyst at ED&F Man Capital Markets.

Economies would require stimulus, monetary easing and lower interest rates to cushion the shocks, all of which would be beneficial for gold, Meir said.

Coronavirus cases continue to surge in the US and elsewhere. The World Health Organisation (WHO) warned that the road to normality would be long, with some countries requiring a reset of strategy.

Central banks around the world have rolled out a flurry of stimulus measures and cut interest rates to mitigate the economic damage caused by the pandemic, helping gold rise more than 30% so far this year as it is seen as a hedge against inflation and fears of currency debasement.

Meanwhile, US legislators said they had made progress in talks on a new coronavirus relief bill.

“What makes gold investing so appealing over the short-term or the medium-term perspective is that when US real yields are lower or negative investors have no opportunity cost in owning bullion,” Stephen Innes, chief market strategist at financial services firm AxiCorp, said in a note.

Holding back the metal from rising, the dollar index rose 0.1% against its rivals, crawling further away from a more than two-year low hit last week. A stronger greenback makes gold more expensive for holders of other currencies.

Elsewhere, silver gained 0.2% to $24.29 an ounce, platinum rose 0.2% to $918.19 and palladium climbed 0.6% to $2,096.56.

Reuters

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