Gold price eases as dollar firms

November 12, 2020 00:00:00

BENGALURU, Nov 11 (Reuters): Gold eased on Wednesday on a firmer dollar and market optimism over a potential COVID-19 vaccine, but bets for continued monetary support to revive a pandemic hit economy capped bullion's declines.

Spot gold fell 0.3 per cent to $1,870.20 per ounce by 1307 GMT, while US gold futures slipped 0.4 per cent to $1,868.70.

The dollar, considered a rival safe-haven, rose 0.3 per cent to a near one-week high, against a basket of currencies.

"The (gold) market is very, very cautious. That's why, the moment there's news out or the dollar strengthens, the market goes with it," said Afshin Nabavi, senior vice president at precious metals trader MKS SA, adding that moves were also limited by the Veteran's Day holiday in the United States.

"The central banks will need to continue to make money to throw in the streets so that the system doesn't fall apart... So until we don't break (below) $1,820, it again feels like gold may want to test $1,900."

Gold fell as much as 5.2 per cent on Monday after drugmaker Pfizer said its COVID-19 vaccine was more than 90 per cent effective based on initial trial results, with the resultant optimism continuing to fuel a strong run in equities.

But the breakthrough highlighted the logistical challenges of distributing hundreds of millions of doses once it becomes available.

The news has slightly reduced the need for stimulus but the vaccine is not yet available, said Quantitative Commodity Research analyst Peter Fertig. Non-yielding gold has risen about 23 per cent so far this year, supported mainly by near-zero interest rates and unprecedented global stimulus, since it's considered a hedge against likely inflation and currency debasement.

Federal Reserve policymakers on Tuesday highlighted the need for more targeted fiscal support from the government.

Investors now await US weekly jobless claims on Thursday.

Silver was down 0.3 per cent at $24.14 per ounce. Platinum fell 0.5 per cent to $878.84, while palladium rose 0.2 per cent to $2,459.61.