Gold eases as risk sentiment improves after Fed policy meeting
· Gold prices edged lower on Thursday as investors’ appetite for riskier assets improved after the Federal Reserve pledged to support the coronavirus-battered U.S. economy, although a weaker dollar limited losses for the bullion.
· Spot gold fell 0.3% to $1,964.51 per ounce by 0052 GMT after rising 1% in the previous session.
· U.S. gold futures rose 0.3% to $1,959.60.
· At the end of its two-day policy meeting on Wednesday, the Fed said it will keep its interest rate target range until it is confident the economy has weathered the COVID-19 pandemic and is on track for maximum employment and price stability goals.
· The surge in U.S. coronavirus cases is beginning to weigh on economic activity, Fed Chair Jerome Powell said, and promised the U.S. central bank would “do what we can, and for as long as it takes,” to limit damage and boost growth.
· Asian stocks were set to track an upbeat Wall Street session on Thursday.
· Meanwhile, the dollar index dropped to a near two-year low against its rivals, making gold less expensive for holders of other currencies.
· U.S. President Donald Trump said that his administration and Democrats in Congress were still “far apart” on a new coronavirus relief bill.
· More than 16.86 million people have been reported to be infected by the novel coronavirus globally and 661,496? have died, according to a Reuters tally.
· SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.1% to 1,241.96 tonnes on Wednesday.
· Silver dropped 0.8% to $24.21 per ounce, while platinum gained 0.6% to $929.73 and palladium rose 0.3% to $2,162.64.
Following the impressive two-week rally that saw gold surging from $1,780 to $1,980, Citibank analysts said that they have revised their short-term target to $2,100. Analysts further added that they expect the troy ounce of the precious metal to reach $2,300 within six to 12 months.
India's 2020 gold demand may hit 26-year low as prices rally: WGC
India’s gold demand in 2020 is expected to fall to the lowest level in 26 years with domestic bullion prices hitting a record high and as falling disposable incomes could curtail retail purchases, the World Gold Council (WGC) said on Thursday.
Lower demand by the world's second-biggest bullion consumer could limit a rally in global prices XAU=, which hit a record high earlier this month, although it could also reduce India's trade deficit and support the ailing rupee INR=D4.
“Fast rising gold prices could act as headwinds,” said Somasundaram PR, the managing director of WGC’s Indian operations.
Local gold futures MAUc1 have jumped 35% so far this year after rising a quarter in 2019.
India’s gold consumption in the first half of 2020 plunged 56% on-year to 165.6 tonnes. Meanwhile, the coronavirus-triggered lockdown also slashed demand by 70% in the June quarter to 63.7 tonnes, the lowest in more than a decade, the WGC said in a report published on Thursday.
Millions of Indians have lost their jobs or taken a pay cut after the country imposed a lockdown on its 1.3 billion people to curb the spread of the virus that has infected more than 1.5 million Indians.
Consumption is generally high during the June quarter due to weddings and key festivals such as Akshaya Tritiya, but lockdown restrictions kept shoppers indoors this year.
The weak demand in the first half could drag down India’s gold consumption in 2020 to the lowest since 1994, when demand stood at 415 tonnes, Somasundaram said, adding that it is still difficult to provide an estimate for full-year demand as the coronavirus crisis is still unfolding.
“Indian demand has previously jumped as much as 300 tonnes in a quarter. Latent demand could come out in the second half,” Somasundaram said.
Reference: CNBC, Reuters, FXStreet
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