Gold falls 1% as risk appetite firms on recovery optimism
· Gold fell over 1% on Tuesday as major economies further eased coronavirus-linked restrictions, fuelling hopes for economic recovery and bolstering risk appetite.
· Spot gold slipped 1.1% to $1,710.95 per ounce, having earlier hit a low since May 13 at $1,708.47. U.S. gold futures settled down 1.7% at $1,705.60.
· “There is a risk-on tone in the market, driving the reversal of (gold’s) safe-haven flows,” said Daniel Ghali, commodity strategist at TD Securities.
· U.S. stocks surged as investors grew optimistic about business restarts and a potential coronavirus vaccine.
· Spain urged foreign tourists to return from July, while Britain will reopen thousands of shopping centres next month. U.S. states were also gradually easing restrictions.
· “A breakdown below $1,700 could crack open the doors towards $1,680 (for gold),” said FXTM analyst Lukman Otunuga. Nevertheless, the downside is likely to be cushioned by trade woes, disappointing economic data and growth fears.”
· White House economic adviser Larry Kudlow said President Donald Trump is so “miffed” with Beijing over the novel coronavirus and other matters that the trade deal is not as important to him as it once was.
· Gold, a safe store of value during political and financial uncertainty, climbed to its highest since October 2012 last week, driven by monetary and fiscal stimulus, recession fears and U.S.-China tensions.
· “Investment demand will continue to strengthen as the U.S. Federal Reserve’s stimulus will remain in place for quite a substantive amount of time,” TD Securities’ Ghali added.
· Elsewhere, palladium dropped 1.3% to $1,966.43 per ounce, platinum fell 1.2% to $828.45, while silver dipped 0.5% to $17.12.
· Mining output in South Africa, the world’s biggest producer of platinum and a leading producer of gold, could fall by 8%-10% this year due to the pandemic, according to Roger Baxter, CEO of industry body the Minerals Council.
Reference: CNBC
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