Money News

Gold rises 1% on vaccine skepticism, surging virus cases

(Reuters) - Gold rose 1% on Thursday on market skepticism over the logistics of a potential COVID-19 vaccine roll-out as cases continued to surge in the United States, while hopes of more fiscal and monetary stimulus offered support to the safe-haven metal.

A vendor shows gold stud earrings at a jewellery showroom in Colombo, Sri Lanka, August 11, 2020. REUTERS/Dinuka Liyanawatte/Files

Spot gold rose 0.9% to $1,882.11 per ounce by 10:36 a.m. EDT (1536 GMT), while U.S. gold futures climbed 1% to $1,880.10.

“The (gold) market is focused on stimulus and on the number of COVID-19 cases, those are continuing to rise,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

Regarding the vaccine, “we don’t know how the distribution is going to work ... It seems like even if they had the vaccine, they probably won’t be aggressive on going out, getting it,” Streible added.

The United States continued to notch up grim records, with a worsening outbreak in the northeast of the country adding pressure on top of an already reeling Midwest.

Data on Thursday showed the number of Americans filing new claims for unemployment benefits fell, but the pace of decline has slowed and further improvement could be limited by a raging COVID-19 pandemic.

Earlier this week, gold lost 4.6% as encouraging late-stage vaccine trial data from Pfizer Inc powered a surge in equities and drove a sharp retreat in safe-haven bullion.

Investor focus now shifts to speeches by the presidents of the U.S. Federal Reserve Banks of Chicago and New York regarding the monetary stimulus and economic stability later in the day.

Gold tends to benefit from widespread stimulus measures because it is widely viewed as a hedge against inflation and currency debasement.

“Technically, gold price remains in the main lateral channel between $1,850 and $2,070,” ActivTrades’ chief analyst, Carlo Alberto De Casa, said in a note.

“Gold is trading close to the lower end of that range and a clear break down of this level could open space for further declines.”

Silver was up 0.4% at $24.35 an ounce. Platinum climbed 1.8% to $880.75, and palladium gained 1.4% to $2,347.38.

Reporting by Asha Sistla in Bengaluru; Editing by Steve Orlofsky