Last Updated : Oct 07, 2020 10:05 AM IST | Source: Reuters

Gold claws back as economic uncertainty lifts appeal

Earlier in the day, spot gold hit its lowest since Sept. 28 at $1,872.66 per ounce. Bullion prices climbed 0.3% to $1,882.12 by 0345 GMT.

Reuters

Gold prices edged up on Wednesday, after hitting a one-week low in early trade, lifted by renewed fears over economic recovery and uncertainty around the U.S. presidential election after President Donald Trump's COVID-19 diagnosis.

Earlier in the day, spot gold hit its lowest since Sept. 28 at $1,872.66 per ounce. Bullion prices climbed 0.3% to $1,882.12 by 0345 GMT.

U.S. gold futures were down 1.2% at $1,886.30.

Close

The low interest rate environment globally along with uncertainties stoked by the upcoming U.S. elections bodes well for gold, said Brian Lan, managing director at dealer GoldSilver Central in Singapore.

COVID-19 Vaccine

Frequently Asked Questions

View more
How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

View more
Show

related news

However, "if U.S. dollar strengthens more we will see it cap gold prices."

The U.S. president, who is being treated for COVID-19, called off negotiations on Tuesday over the aid package that was meant to stimulate the economy, until after the Nov. 3 election.

The announcement stoked risk aversion, while bolstering the U.S. dollar and dragging gold prices lower up to 2%.

Gold tends to benefit from widespread stimulus measures as it is widely viewed as a hedge against inflation and currency debasement.

The dollar index was last up 0.2% against rivals.

Trump's decision to call off stimulus talks increases downside risks for an already shaky U.S. economy, which is likely to favour safe-harbour flows into the dollar, in which the bullion is priced.

Meanwhile, top U.S. and European central bankers on Tuesday called for renewed government spending to support families and businesses hit by the pandemic.

Investors would now watch out for minutes from U.S. Federal Reserve's Sept. 15-16 policy meeting and vice presidential debate due later in the day.

On the technical front, spot gold may revisit its Sept. 24 low of $1,847.57 per ounce, according to Reuters technical analyst Wang Tao.

Silver rose 1.5% to $23.43 per ounce, platinum was up 1.3% at $859.05, while palladium climbed 0.4% to $2,351.30.
First Published on Oct 7, 2020 09:57 am

tags #Commodities #Covid-19 #economic #Gold #silver