Gold gains as concerns over US stimulus talks ease

FE Team | Published: October 08, 2020 00:34:04

BENGALURU, Oct 07 (Reuters): Gold rebounded on Wednesday as worries about a halt in US coronavirus stimulus talks faded, bolstering bullion's appeal as a hedge against inflation and prompting investors to cover short positions after a near 2.0 per cent decline in the last session.
Spot gold was up 0.6 per cent to $1,887.84 per ounce at 103 GMT.
US gold futures fell 0.9 per cent to $1,891.60.
Gold fell nearly 2.0 per cent on Tuesday after US President Donald Trump halted negotiations for an additional stimulus package until after the Nov 3 election. However, he later suggested new payroll assistance to US passenger airlines.
"There has been some short covering which has revived the market off the lows. Gold is finding its way back to the $1,900s, it's less a case of whether there is going to be a stimulus package and more of the timing," said independent analyst Ross Norman.
"The Democratic leader has a significant lead and the markets are turning to what would that entail, certainly the suggestion is the Democrats, if they were to be successful, will be pushing through a significantly larger stimulus package," Norman said.
Gold, seen as a hedge against inflation and currency debasement, has risen 24 per cent this year, supported by massive government and central bank stimulus worldwide.
"Overall, it's the reaction in the bond markets, the yields are lower, the US dollar is a bit weaker against the euro," said Quantitative Commodity Research analyst Peter Fertig.
Fertig added the uncertainty from the upcoming US elections would keep gold supported.
Investors now await minutes from US Federal Reserve's Sept. 15-16 policy meeting due later in the day.
They also took stock of stringent guidelines for experimental coronavirus vaccines released by the US FDA, delaying the availability of vaccine until after the election.
Elsewhere, silver climbed 2.1 per cent to $23.56 per ounce, platinum gained 1.3 per cent to $859.50, while palladium rose 0.4 per cent to $2,350.06.