Gold flat, pares gains after jumping 1% on vaccine hopes
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Gold was little changed on Monday after
jumping 1% during the session, paring gains as U.S. equities
rose on hopes for a potential COVID-19 vaccine trial, while
auto-catalyst palladium rose to the highest in almost three
weeks.
Spot gold was little changed at $1,740.90 per ounce
by 1042 ET. U.S. gold futures fell 0.7% to $1,744.
“The trend is still to the upside, there’s still plenty of
reason to buy gold – right now the reason why gold is kind of
wobbling around positive and negative change for the day is
because everybody is thinking ‘risk-on’ get into equities – as
markets across the board are up 3%,” said Michael Matousek, head
trader at U.S. Global Investors.
Wall Street’s main indexes surged as encouraging early data
from a potential coronavirus vaccine trial boosted sentiment,
with investors also counting on more stimulus to rescue the
economy from a deep slowdown.
Federal Reserve Chairman Jerome Powell highlighted that the
most important data for the U.S. economy right now are the
“medical metrics” around the pandemic and he outlined the likely
need for three to six more months of government financial help
for firms and families.
SPDR Gold Trust holdings, the world’s largest
gold-backed exchange-traded fund, rose 0.8% to 1,113.78 tonnes
on Friday – its highest in more than seven years. Data
published that day showed U.S. retail sales and industrial
production both plunged in April, with the coronavirus crisis
continuing to pummel the U.S. labor market.
Data in Japan, meanwhile, confirmed that the world’s
third-largest economy slipped into recession in the first
quarter.
Markets are also keeping a wary eye on China’s trade
relations with the United States.
Among other precious metals, palladium soared 5.3% to
$2,001.54 an ounce after gaining more than 9% earlier.
“One of the drivers of palladium is catalytic converters and
there’s a lot of talk about auto manufacturers ramping up
production. Some traders are probably thinking they’re going to
get ahead of the curve and they start to buy palladium ahead of
the ramp up by the auto manufacturers,” U.S. Global Investors’
Matousek added.
Both platinum and palladium are used by automakers in
catalytic converters to clean car exhaust fumes.
Platinum rose 2.8% to $819.93 an ounce, while silver
jumped 3.1% to $17.13 – with both metals having hit a
two-month high earlier.
(Reporting by Asha Sistla in Bengaluru; Editing by David
Gregorio)
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