Spot Gold Dips As COVID-19 Treatment Hopes Boost Risk Appetite
Gold prices fell on Monday as risk sentiment improved after the US drug regulator authorised the use of blood plasma from recovered COVID-19 patients as a treatment option, while the dollar held firm. Spot gold was down 0.4 per cent at $1,932.48 per ounce by 0654 GMT (12:24 pm in India) after hitting a one-week low of $1,910.99 on Friday. US gold futures fell 0.2 per cent to $1,942.60 per ounce.
"Weighing a little bit on immediate sentiment is virus positive news that has helped stocks and other risk assets go higher today," said Stephen Innes, chief market strategist at financial services firm AxiCorp, adding that gold was in consolidation ahead of Jackson Hole.
Asian stocks extended gains after the US Food & Drug Administration authorised the use of blood plasma from patients who have recovered from COVID-19 as a treatment for the disease.
Investors are now waiting for Federal Reserve Chairman Jerome Powell's speech at Jackson Hole on Thursday for any hints about how aggressively the central bank will try to manage the long-term recovery from the coronavirus pandemic.
"The US central bank should reiterate its pledge for ultra-low rates, providing some support for gold," Avtar Sandu, a senior commodities manager at Phillip Futures, said in a note.
"The central bank may be expected to signal greater tolerance for above-target inflation keeping real interest rates low."
Lower US interest rates put pressure on the dollar and bond yields, increasing the appeal of non-yielding bullion.
Central banks around the world have rolled out massive stimulus measures to mitigate the economic damage caused by the virus outbreak, which has infected more than 23.31 million people worldwide so far.
The dollar index, meanwhile, held steady against a basket of major currencies after climbing to a more than one-week high in the previous session.
Silver dropped 1.6 per cent to $26.26 per ounce, platinum slipped 0.5 per cent to $913.61 and palladium fell 1.1 per cent to $2,158.65.
