June 25, 2020 / 11:45 AM / 15 days ago

PRECIOUS-Gold gains as virus spike hits equities; firm dollar caps upside

    * World stocks drop to a more than one-week low
    * IMF predicts deeper global recession due to coronavirus
    * Gold losing out safe-haven appeal to dollar
    * For an interactive graphic tracking the global coronavirus
spread, open tmsnrt.rs/3aIRuz7 in an external browser

 (Updates prices)
    By Nakul Iyer
    June 25 (Reuters) - Gold prices edged higher on Thursday as
a spike in coronavirus cases dented demand for riskier assets,
although gains were capped by rival safe-haven buying of the
dollar.  
    Spot gold        was up 0.1% at $1,763.29 per ounce as of
1309 GMT. U.S. gold futures         eased 0.1% to $1,773.70.
    Gold hit its highest since October 2012 at $1,779.06 on
Wednesday before settling 0.3% lower, breaking a 3-session
winning streak.
    World stocks spluttered to their lowest in over a week after
a surge in U.S. coronavirus cases and an IMF warning of a near
5% plunge in the global economy this year.            
            
    While negativity in stock markets is propping up gold,
"whenever we see these kind of movements, it does tend to favour
the dollar," said OANDA analyst Craig Erlam.
    The U.S. dollar held firm on Thursday as rising trade
tensions coupled with fears of a second wave of coronavirus
infections fuelled demand for the safe-haven currency.       
    The surge in infections has kept investors on tenterhooks,
with Australia and three U.S. states reporting a spike in cases
as well as Brazil, Latin America and India, the world's second
biggest bullion consumer.                         
    "The fact that gold has come under slight pressure
nonetheless could be a sign of renewed forced selling to
generate liquidity, as has often happened during phases of risk
aversion in the past three months," Commerzbank said in a note.
    "What is more, it is noticeable that falls in the gold price
are still being viewed by investors as buying opportunities," it
said. "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 1.2% to
$1,841.62 per ounce, platinum        was flat at $799.88 and
silver        rose 0.8% to $17.66.

 (Reporting by Nakul Iyer and Swati Verma in Bengaluru; Editing
by Elaine Hardcastle and Jan Harvey)
  
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