Gold holds steady on fresh virus concerns, Fed outlook

Gold prices were little changed on Wednesday, buoyed by concerns over a second coronavirus wave and expectations that the US Federal Reserve would maintain low interest rates in the near term, while a firm dollar put a lid on gains.

Spot gold was little changed at $1,726.34 per ounce by 1:31 p.m. ET (1731 GMT).

US gold futures were also little changed at$1,735.30 per ounce.

While the strength in the dollar and, initially, US stock markets have weighed on gold, the fact that Fed Chair Jerome Powell does not foresee any interest rate hikes in the near future makes it "better to be a long-term investor in gold, buying the metal at every small pullback," said Michael Matousek, head trader at US Global Investors.

Denting any advance in gold, the dollar also benefited from safe-haven flows.

With a full US economic recovery out of reach until the coronavirus pandemic is brought to heel, the Federal Reserve will use its "full range of tools" to cushion households and businesses, Fed Chair Jerome Powell told lawmakers.

Lower interest rates reduce opportunity cost for holding non-yielding bullion.

The S&P 500 and the Dow edged higher in choppy trading on Wednesday as hopes of a swift recovery from a coronavirus-driven downturn were dented by fears of a record rise in coronavirus cases in six US states.

Meanwhile in China, Beijing also canceled scores of domestic flights on Wednesday, ramping up attempts to contain a renewed outbreak of the coronavirus.

The gold market is more long than short overall, so investors are taking advantage of any rallies, trading in a range of $1,730-$1,735 on the upside and $1,710-$1,715 on the downside, said Afshin Nabavi, senior vice president at precious metals trader MKS SA.

Elsewhere, palladium fell 0.5% to $1,922.89 an ounce and platinum was down 0.3% at $818.25, while silver gained 0.9% to $17.55.