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Gold steady as coronavirus, U.S. elections uncertainty loom

· Gold prices were little changed on Wednesday, staying above the $1,900-mark, as uncertainties about U.S. elections and surging global Covid-19 cases countered pressure from a firmer dollar and fading hopes of an immediate U.S. stimulus package.

· Spot gold was steady as $1,906.15 per ounce by 0329 GMT. U.S. gold futures were down 0.3% at $1,907.10.

· “Investors need a reason to buy more gold and the reason to buy gold will come from a policy signal,” said Stephen Innes, chief global market strategist at Axi.

“With the virus raging all over, we are going to get stimulus at some point ... This is also probably leaning towards more central bank intervention because the economic hit is going to be quite significant,” he added.

· The pandemic has prompted unprecedented money printing and low-interest rates globally, putting gold on track for its best year in a decade given its appeal as a hedge against inflation and currency debasement.

Meanwhile, markets were disappointed after U.S. President Donald Trump acknowledged that a coronavirus economic relief deal would likely come after the Nov. 3 election.

· The dollar index was up 0.2% against rivals, with the U.S. elections’ uncertainty adding to the “risk off” tone.

· Worries about the virus’ spread continued, with the United States, Russia, France and other countries seeing record new infections recently. European governments introduced new curbs to rein the fresh outbreaks.

· On the technical front, spot gold may test a support at $1,887, as the bounce triggered by this support is ending around a resistance at $1,912, according to Reuters technical analyst Wang Tao.

· Goldman is calling a bull market for commodities in 2021 on dollar moves and inflation risk

Goldman Sachs is forecasting a bull market for commodities in 2021 based on its outlook for a weaker dollar, inflation, and the prospect of further economic and fiscal stimulus.

Analysts at the bank on Thursday predicted a 12-month return of 30% on the S&P’s Goldman Sachs Commodities Index, recommending long positions on silver, copper, gold, U.S. gas, Brent crude and jet regrade.

Inflation concerns and a weaker dollar

Markets are now increasingly worried about inflation returning as a result of historic fiscal spending and continued low interest rates, which the bank says will likely drive more investment in commodities in order to offset that risk.

Gold is seen as one of those hedges, and has seen its price shoot up by 26% this year. Goldman expects the metal to average a price of $2,300 per ounce in 2021, up from its predicted average of $1,836 per ounce this year.

· Silver fell 0.9% to $24.33 per ounce, platinum rose 0.1% to $880, while palladium rose 0.8% to $2,348.81.

Reference: CNBC