COVID fallout hits oil and gold prices
Gold rose as the dollar weakened after dovish rhetoric from the Federal Reserve, which gave no indication a tightening of monetary policy was imminent.
Risk sentiment was broadly improved after minutes from the Fed’s March meeting showed officials were united on the need to see more progress on the recovery before scaling back their massive bond-buying program. European equities and U.S. stock futures rose on Thursday, while the dollar edged lower, supporting gold.
Traders will look for further comments from Fed Chair Jerome Powell, who is due to take part in a panel about the global economy on Thursday. His persistently accommodative stance on monetary policy has helped cool a rise in Treasury yields that harmed non-interest bearing gold.
“Gold has tracked long-dated real Treasury yields in recent months,” analysts at Capital Economics wrote in a note. “We think that long-dated real yields will rise a bit further, putting the gold price under more pressure.”
Bullion has dropped about 8 per cent this year amid optimism over the global recovery and as rising bond yields damped the appeal of the precious metal. Holdings in exchange-traded funds, one of the main pillars behind gold prices hitting a record in 2020, continue to decline, signaling waning investor interest.
Spot gold gained 0.8 per cent to US$1,750.75 an ounce by 12:35 p.m. in London, after dropping 0.3 per cent on Wednesday. Silver and platinum advanced, while palladium was little changed. The Bloomberg Dollar Spot Index slipped 0.2 per cent, reversing Wednesday’s gain.