Gold falls over 1pc as dollar strengthens, lockdowns ease

• Spot gold slipped 1.2pc to $1,685.57 per ounce by 12:33 p.m. EDT (1633 GMT).
• Gold tends to benefit from widespread stimulus from central banks because it's considered a hedge against inflation and currency debasement.
• Investors also kept a close eye on brewing US-China tensions over the origin of the coronavirus.

Gold fell more than 1pc on Wednesday, pressured by a stronger dollar and expectations that gold supplies will grow as bullion refineries resume operations, and on gradual improvement in investor risk appetite as countries have begun to ease coronavirus restrictions.

Spot gold slipped 1.2pc to $1,685.57 per ounce by 12:33 p.m. EDT (1633 GMT).

US gold futures fell 1.3pc to $1,688.50, narrowing their lead over the London spot prices to just around $3 after two of the world's biggest gold refiners said they are restoring almost all operations.

This ended six weeks of closures that disrupted global gold supply and helped drive prices in New York and London further apart than they have been in decades. Gold has risen about 11pc so far this year as the global economy has slumped during the pandemic.

"It's a probably a combination of more supply coming into the COMEX, and probably a little bit less interest as risk appetite is growing and the US dollar rallies," said Bart Melek, head of commodity strategies at TD Securities.

Many countries like Italy, Germany and the United States are tentatively easing lockdowns.

The S&P 500 and Nasdaq rose on hopes of a pickup in business activity as states eased coronavirus-induced curbs, with investors also looking past a stunning 20 million-worker plunge in US private payrolls last month.

Further denting gold's appeal, the dollar index rose 0.3pc to a more than one-week high.

"You can't count out gold as dollar strength is not due to higher interest rates but weaker global currency outlook," George Gero, managing director at RBC Wealth Management said in a note.

The outbreak, which has infected more than 3.68 million people globally, has battered global growth and prompted nations to unleash massive fiscal and monetary measures to limit economic damage.

Gold tends to benefit from widespread stimulus from central banks because it's considered a hedge against inflation and currency debasement.

Investors also kept a close eye on brewing US-China tensions over the origin of the coronavirus.

Reflecting investor interest, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose to their highest since April 2013.

Elsewhere, silver fell 0.7pc to $14.91 per ounce and platinum dropped 1.9pc to $750.05.

Palladium eased 0.1pc to $1,798.42 per ounce after hitting its lowest in over a month on Tuesday.

Prices of platinum group metals could fall 15-20pc in the near term on a rising surplus, Citigroup said in a note.