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Money News

Gold falls 1% on stronger dollar, economic rebound hopes

(Reuters) - Gold slipped as much as 1% on Thursday as the dollar firmed and progress in COVID-19 vaccine development boosted hopes of a faster economic rebound and tempered bets for an immediate U.S. coronavirus relief package.

Gold bullions are displayed at Degussa shop in Singapore June 16, 2017. REUTERS/Edgar Su/File Photo

Spot gold fell 0.8% to $1,856.58 per ounce by 9:47 a.m. EST (1447 GMT), after hitting its lowest since Nov. 9 at $1,851.83. U.S. gold futures slipped 0.9% to $1,856.80.

A stronger dollar and uncertainty over further economic stimulus is weighing on gold, said Jeffrey Sica, founder of Circle Squared Alternative Investments.

“Though there’s an anticipation for more (stimulus), some people are electing to take profits until there’s more clarity.”

Rival safe haven dollar rose 0.4% versus major currencies, as coronavirus cases surged globally.

Gold tends to benefit from economic stimulus since it’s considered a hedge against inflation and currency debasement that it may trigger.

Optimism over progress in vaccines, which could be ready for U.S. authorisation within weeks, have also dented bullion’s appeal.

“(Vaccines) removed some of the longer term uncertainty when it comes to the virus. So although there are concerns about the short-term implications of the spike, longer term, people are a lot more optimistic, which is probably why we’ve seen somewhat of a pullback in gold,” Sica said.

An unexpected rise in new U.S. jobless claims also didn’t help gold.

“We’re having this clash of fear over the present COVID-19 conditions, and then we’ve the hope of the vaccines coming in a few months, so that’s kind of tugging the markets back and forth,” Kitco Metals senior analyst Jim Wyckoff said.

“Gold traders are now focusing on the next few months with the dark winter amid the pandemic that could impact consumer demand for gold.”

Silver dipped 2.1% to $23.80 per ounce. Platinum was unchanged at $942.62, while palladium eased 1% to $2,306.30.

Reporting by Sumita Layek in Bengaluru; editing by David Evans

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