June 25, 2020 / 5:35 AM / 21 days ago

Gold on back foot as investors flock to safety of dollar

(Reuters) - Gold prices edged lower in volatile trade on Thursday, as a spike in coronavirus cases and mounting economic tolls drove investors to the safety of the U.S. dollar and pressured risky assets.

FILE PHOTO: A Saudi jeweller wearing a protective face mask arranges gold jewels at a jewellery store during the holy month of Ramadan, after the outbreak of the coronavirus disease (COVID-19), in Riyadh, Saudi Arabia, May 5, 2020. REUTERS/Ahmed Yosri/File Photo

Spot gold was down 0.2% at $1,758.70 per ounce as of 11:19 a.m. ET (1519 GMT). U.S. gold futures eased 0.4% to $1,768.20.

“The market is taking into account what kind of ramifications the second wave of the virus could have on the economy,” said David Meger, director of metals trading at High Ridge Futures.

Despite a slight pullback, “the (gold) market seems well supported due to the second wave of coronavirus in the United States and around the world, and the economic concerns related to that is elevating safe-haven demand,” Meger added.

U.S. stocks slipped on Thursday as investors were unnerved by an alarming rise in new coronavirus cases and high weekly jobless claims number.

The weekly jobless claims report on Thursday showed millions continue to collect unemployment checks more than a month after many businesses resumed operating following virus-led lockdowns.

Other data underscored expectations that the economy would contract in the second quarter at its deepest pace since the Great Depression.

Gains in bullion were, however, cut by safe-haven flows into the greenback. The dollar index was up 0.3% at 97.39.

Australia and some U.S. states reported a spike in cases as well as Latin America and India, the world’s second biggest bullion consumer.

“Falls in the gold price are still being viewed by investors as buying opportunities,” Commerzbank said in a note, adding, “We therefore regard the latest weakness in the gold price as temporary and envisage new highs in the near future.”

In other precious metals, palladium fell 0.8% to $1,848.19 per ounce, platinum was down at 0.4% at $796.64 and silver rose 0.9% to $17.68.

Reporting by Diptendu Lahiri and Swati Verma in Bengaluru; Editing by Steve Orlofsky

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