Gold eased overnight as the dollar firmed but fears over a fresh wave of coronavirus infections and the US Federal Reserve’s pledge to keep interest rates low kept bullion close to its highest in over a week.
Spot gold was down 0.33 per cent at $US1,730.58 per ounce at 1804 GMT, having earlier hit its highest since June 2 at $US1,744.36. US gold futures settled up 1.1 per cent at $US1,739.80.
“You had a lot of fresh infections, which seemed to spook investors a bit so that pretty much put everybody into a risk-off and basically they’re selling everything except for the dollar and natural gas,” said Michael Matousek, head trader at US Global Investors.
The dollar rose versus major currencies, benefiting from safe-haven flows as Wall Street slumped on reports of a rise in virus cases as most US states reopen.
Traders did not read too much into the slight pullback in gold, saying the safe-haven metal’s longer term trajectory was still positive.
Tai Wong, head of base and precious metals derivatives trading at BMO, attributed it to “some adjustment from longs who have had quite a windfall over the last 24 hours.”
“Many market participants remain convicted that ‘this time it will be different’ as gold rallies once again to the top of range despite having failed break higher in four previous attempts over 10 weeks.”
On Wednesday, spot gold notched up its biggest daily percentage rise in more than a month, as the Fed flagged the need to keep the key interest rate near zero through at least 2022.
Gold has rallied about 20 per cent since touching an over three-month low of $US1,450.98 on March 16.
Low interest rates tend to support gold, considered a hedge against inflation and currency debasement.
Elsewhere, silver declined 3.1 per cent to $US17.69 per ounce, after rising 3.8 per cent on Wednesday.
Palladium fell 1 per cent to $US1,928.03 per ounce, and platinum dipped 2.2 per cent to $US814.30.