· Gold prices fell on Tuesday as the dollar firmed and as shares rose on hopes of a rebound in China economic activity, while safe-haven demand amid concerns over the coronavirus outbreak kept the metal on track for its sixth straight quarterly gain.
Spot gold fell 0.5% to $1,613.40 per ounce by 0327 GMT. It gained about 6.4% for the quarter, and about 1.8% for the month. U.S. gold futures eased 0.2% to $1,615.80.
· "The dollar, yields, and a better equity market performance are pressuring gold," said Stephen Innes, chief market strategist at financial services firm AxiCorp, adding that the negative correlation between equities and gold has started to form again.
The dollar gained against its key rivals as investors braced for prolonged uncertainty and governments tightened lockdowns and launched monetary and fiscal measures to fight the virus.
· Asian shares rallied on positive factory data from China that raised hopes of a rebound in economic activity, while longer-term U.S. Treasury yields followed stock market rally on Monday as the U.S. government was in talks with healthcare companies to mass produce coronavirus vaccines.
Weighing further on gold, Russia's central bank announced it would stop buying gold starting April 1 and offered no explanation behind the decision.
· "However, it's not catching traders by surprise as lower oil prices mean fewer petro dollars per barrel for the central bank to buy gold ... If oil prices remain depressed, there will probably be a similar curtailment of bullion purchases across other oil-exporting central banks," Axicorp's Innes said.
Oil prices remained near 18-year lows as the virus-led shutdowns put pressure on demand.
· Gold Price Analysis: Range play continues, focus on Bollinger bands
Gold's sideways churn in the range of $1,630 to $1,610 continues for the third day. With the decline in the price volatility, the Bollinger bands have narrowed.
The focus, therefore, is on the upper and lower bands currently located at $$1,626 and $1,612, respectively. An hourly close above the upper band would imply a range breakout and open the doors to a test of recent highs above $1,640. Alternatively, a range breakdown would expose the support at $1,594.
The latter looks likely as the 4-hour chart relative strength index is reporting a bearish divergence. Also, the dollar index, which tracks the value of the US dollar against majors, is flashing green near99.38, having bounced up from 98.30 on Monday.
· Russia's central bank to suspend gold purchases on domestic market from April 1
Russia's central bank announced that it will suspend gold purchases on the domestic market starting April 1st, Reuters reported on Monday, citing IFAX news agency.
· Among other precious metals, platinum rose 0.5% to $726.51, but was on track to post its biggest quarterly percentage loss since 2008.
The world's largest platinum producers Anglo American Platinum, Sibanye-Stillwater and Impala
Platinum have declared force majeure on contracts after a three-week national lockdown in South Africa forced operations to close.
Palladium fell 0.6% to $2,313.94 an ounce, while silver shed 0.3% to $14.07, and was set to post its worst quarter since June 2013.
Reference: Reuters, FX Street
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