June 10, 2020 / 3:15 AM / a month ago

Gold gains on bets for further economic support from Fed

(Reuters) - Gold prices rose to a one-week high on Wednesday on expectations that the U.S. Federal Reserve would roll out further measures to aid an economic recovery.

An employee shows gold granules at the Prioksky Non-Ferrous Metals Plant in Kasimov, Russia February 14, 2017. REUTERS/Sergei Karpukhin/Files

Spot gold rose 0.18 % to $1,717.41 per ounce by 12:26 p.m. ET (1626 GMT), paring some gains from earlier in the session when it hit its highest since June 3 at $1,726.22 as traders booked profits. The price rose more than 1% in the last session.

U.S. gold futures were up 0.1% at $1,723.80.

“Expectations are that the Fed will continue to be aggressive on supporting the economy, that they will take any approach to get through the recession we’re in,” said Phil Streible, chief market strategist at Blue Line Futures in Chicago.

“With the additional stimulus measures it looks like there’s no ending to the quantitative easing. Therefore, gold and silver should continue to be supported.”

On Wall Street, the S&P 500 and Dow Jones Industrial Average slipped, while the dollar slumped to three-month lows against other major currencies as investors awaited the Fed’s first economic projections since the coronavirus crisis triggered a recession in February. [.N] [USD/]

Large stimulus measures tend to support gold, which is often considered a hedge against inflation and currency debasement. Gold is also seen as a safe haven during economic uncertainties.

The global economy will suffer the biggest peacetime downturn in a century, the Organisation for Economic Co-operation and Development said.

Goldman Sachs expects gold to reach $1,800 per ounce on a 12-month basis and the tail risk of above-target inflation as a potential driver for prices to climb beyond $2,000.

Elsewhere, silver rose 0.9% to $17.75 an ounce, palladium fell 1.1% to $1,920.01, while platinum fell 1.5% to $824.99.

Reporting by Asha Sistla in Bengaluru; Editing by Marguerita Choy and Jonathan Oatis

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