Gold rises as Covid-19 concerns fuels its safe-haven appeal

Bengaluru — Gold prices firmed on Wednesday, as escalating concern over the economic fallout from the spread of the Delta variant of Covid-19 dented sentiment towards riskier assets, lifting bullion’s appeal.

Spot gold rose 0.3% to $1,791.67/oz by 3.14am GMT, hovering below a more than one-week high of 1,795.25 hit on Tuesday.

US gold futures were up 0.3% to $1,793.30.

“The elephant in the room is this Delta variant and whether it does materially affect the global recovery. In that situation, gold is likely to find more haven buying,” said Jeffrey Halley, a senior market analyst for Asia-Pacific at Oanda.

Asian shares held near year-to-date lows as the Delta variant continued to sweep through the region.

Also hinting at a slowdown in the economy, US retail sales fell more than expected in July.

Investors now await the minutes from Federal Reserve’s July meeting later in the day for guidance on its tapering plans.

“Gold’s fate will be decided by the FOMC [Federal open market committee] and whether they signal imminent tapering in September. If that leads to a higher dollar and US yields gold is likely to fall back below $1,700,” Halley added.

On Tuesday Minneapolis Fed president Neel Kashkari said it could be “reasonable” to start tapering later this year, but will depend on progress in the labour market.

Fed chief Jerome Powell said it remains unclear whether the heightened outbreak of the Delta variant will have a noticeable effect on the economy.

The dollar index held near recent peaks on other majors.

Gold often competes with the dollar as a safe store of value during political and financial uncertainties, with a higher dollar also making gold more expensive for those holding other currencies.

Silver rose 0.7% to $23.79/oz, while platinum rose 1.3% to $1,009.67.

Palladium rose 1.2% to $2,519.18, bouncing off near a two-month trough hit on Tuesday.

Reuters