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Money News

Gold eases as equities hit record on optimism over virus treatment

(Reuters) - Gold edged lower on Monday as optimism over a U.S. health regulator’s authorization of a COVID-19 treatment lifted Wall Street stocks to record highs, although a weaker dollar limited bullion’s losses.

FILE PHOTO: Gold bars at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna, Austria, March 18, 2016. REUTERS/Leonhard Foeger

Spot gold fell 0.4% to $1,932.50 an ounce by 10:53 a.m. EDT (1453 GMT), having jumped 1% to $1,961.40. U.S. gold futures eased 0.2% to $1,942.90.

“Gold is just consolidating right now with stock indexes at record highs. It really needs a bigger catalyst, it needs additional fiscal stimulus, it needs inflation to pick up, in order to get really going,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

The S&P 500 and Nasdaq opened at record levels after the U.S. Food & Drug Administration approved the emergency use of blood plasma in COVID-19 patients and on a report the Trump administration may fast-track a vaccine candidate.

Meanwhile, talks between top Democrats and Republicans on coronavirus aid legislation remained stalled.

Limiting bullion's losses, the dollar .DXY fell 0.2% against rivals, making gold cheaper for holders of other currencies.

“While COVID-19 vaccine developments and improving economic data present near-term headwinds to gold, low and negative interest rates, a weaker U.S. dollar, and expectations for further stimulus keep the balance of risks to the upside,” said Standard Chartered analyst Suki Cooper in a note.

Central banks worldwide have rolled out massive stimulus measures to alleviate the economic damage caused by the COVID-19 pandemic, but that has also increased the probability of rising inflation.

Investors are awaiting U.S. Federal Reserve Chair Jerome Powell’s address to the bank’s annual symposium in Jackson Hole, Wyoming, on Thursday for signs of how aggressively it will seek to handle the long-term recovery from the pandemic.

Silver fell 0.6% to $26.53 an ounce, platinum was up 0.5% at $922.75 and palladium eased 1.1% to $2,159.06.

Reporting by Sumita Layek in Bengaluru; Editing by Steve Orlofsky

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