Gold fell on Monday as US Treasury yields rose and plans to ease coronavirus-induced lockdowns by many countries whetted investor appetite for riskier assets, but unprecedented stimulus measures from governments provided underlying support.
Spot gold fell 0.8% to $1,712.99 per ounce by 11:08 a.m. EDT (1508 GMT), having earlier fallen as much as 1.3% to $1,704.45. US gold futures were down 0.5% at $1,726.70.
"While the broader macro backdrop remains supportive for gold prices in the near term, they're tracking real yields most closely. US treasury yields are ticking higher this morning and that has ended up weighing down gold prices," said Standard Chartered Bank analyst Suki Cooper.
"Safe-haven buying has continued to support gold primarily through ETF inflows and continued retail investor demand... So if we see different economies starting to reopen, we might see some of that safe haven demand starting to ease."
Global stock markets gained as investors cheered news that more countries and US states were looking to ease lockdowns.
About 2.97 million people have been reported to be infected by the coronavirus globally and 205,948 have died, according to a Reuters tally.
"Even when the lockdown is lifted, the world will still be far from any kind of normality. The bigger risk then is economic collapse," Commerzbank analysts wrote in a note.
"To counter this, governments around the globe are likely to continue spending unparalleled sums of money - most of which will be created by the central banks. Gold should remain in demand as a crisis currency in this environment, as reflected in ongoing exchange-traded fund (ETF) inflows."
Gold tends to benefit from widespread stimulus measures as it is often seen as a hedge against inflation and currency debasement.
Investors now shift their focus to a US Federal Reserve meeting ending on Wednesday and a European Central Bank (ECB) meeting on Thursday as major central banks once again take the stage as the global economy grapples with blows inflicted by the COVID-19 outbreak.
Elsewhere palladium dropped as much as 6.7% to a near one-week low of $1,890.13 per ounce. It was last down 5% at $1,923.21 per ounce. "Palladium has been pulled between both demand shocks and supply shocks on the back of COVID-19," Standard Chartered's Cooper said. "We still expect palladium market to deliver a deficit this year... But that deficit is likely to be much smaller than what we had initially anticipated." Platinum rose 0.1% to $760.14 and silver eased 0.1% to $15.22.
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