(Reuters) - Gold eased on Wednesday with the metal facing competition from the dollar as a hedge against concerns over a second coronavirus wave, but bullion’s losses were limited by expectations the U.S. Federal Reserve will maintain low interest rates for the near-term future.
Spot gold was down 0.2% at $1,723.71 per ounce by 11:22 a.m. ET (1522 GMT).
U.S. gold futures fell 0.3% to $1,731.30 per ounce.
While the strength in the dollar and initially, U.S. stock markets, have weighed on gold, the fact that Fed Chair Jerome Powell does not foresee any interest rate hikes in the near future makes it “better to be a long term investor in gold, buying the metal at every small pullback,” said Michael Matousek, head trader at U.S. Global Investors.
Denting any advance in gold, the dollar also benefited from safe haven flows.
Powell indicated on Tuesday there would be no hikes to interest rates in the near future and the Fed said it would start purchasing corporate bonds in the secondary market.
Lower interest rates reduce opportunity cost for holding non-yielding bullion.
Major Wall Street indices edged lower in choppy trading as a record rise in coronavirus cases in six U.S. states dented sentiment following a three-day rally on hopes of a swift recovery from the virus-driven downturn.
“If governments confirm a second wave, then $1,740 is very likely (for gold),” said Jigar Trivedi, commodities analyst at broker Anand Rathi Shares.
Beijing also cancelled scores of domestic flights on Wednesday, ramping up attempts to contain a renewed outbreak of the coronavirus.
The gold market is more long than short overall, so investors are taking advantage of any rallies, trading in a range of $1,730-$1,735 on the upside and $1,710-$1,715 on the downside, said Afshin Nabavi, senior vice president at precious metals trader MKS SA.
Elsewhere, palladium fell 1.2% to $1,908.93 an ounce while platinum gained 0.2% to $822.03 and silver rose 0.5% to $17.47.
Reporting by Diptendu Lahiri and Eileen Soreng in Bengaluru; Editing by Chris Reese