May 27, 2020 / 3:41 AM / 3 months ago

PRECIOUS-Gold hits 2-week low on reopening optimism

    * Gold will breach $2,000/oz in next 12 months - Citi 
    * Sharp V-shaped recovery for global economy unlikely -poll
    * For an interactive graphic tracking the global coronavirus
spread, open tmsnrt.rs/3aIRuz7 in an external browser

 (Adds comment, detail about U.S. economic data, updates prices)
    By Harshith Aranya
    May 27 (Reuters) - Gold eased to a two-week low on Wednesday
on optimism about the reopening of the world economy, though
rising Sino-U.S. tensions over Beijing's proposed security law
for Hong Kong capped losses.
    Spot gold        was down 0.2% to $1,707.85 per ounce by
0742 GMT, after hitting its lowest level since May 13 at $1,703
earlier in the session. U.S. gold futures        were down 0.5%
to $1,697.60.
    "What we saw over the preceding 24 hours was a break of
relatively meaningful support at about $1,715," said DailyFx
currency strategist Ilya Spivak.
    "The positive story seems to be easing of restrictions and
(that) there will be some sort of rebound in economic
activity... but, there is (also) a lot of negativity. Tension
between the U.S. and China is a huge risk."
    U.S. President Donald Trump said on Tuesday Washington was
working on a strong response to China's planned national
security law for Hong Kong, adding it would be announced before
the end of the week.             
    Asian shares slipped as political unrest in Hong Kong
rekindled concerns about the disruptive protests seen last year.
           
    U.S. consumer confidence nudged up in May and new home sales
beat expectations, data showed on Tuesday.             
    Risks for a temporary short-term gold market unwind to a
low- to mid-$1,600 level seem to be rising, Citi said in a note,
adding that they "remain outright bullish (on) gold over the
medium term and forecast that $2,000/oz will be breached in the
next 12 (months)".
    Economic prospects for the developed world this year have
darkened again in the past month, with a V-shaped sharp recovery
seen as unlikely, a poll by Reuters showed.             
    "The long-term consequences of this lockdown are not going
away anytime soon and we aren't going to have the perfect
economy," Spivak said.
    Palladium        rose 0.6% to $1,967.72 per ounce, platinum
       gained 0.2% to $831.16. Silver        fell 0.4% to
$17.04.

 (Reporting by Harshith Aranya and K. Sathya Narayanan in
Bengaluru; Editing by Devika Syamnath, Rashmi Aich and
Subhranshu Sahu)
  
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