LONDON: Gold rose on Wednesday after concerns over further US stimulus to support the virus-hit economy waned, with focus now on minutes from the US Federal Reserve’s last meeting for clues on the outlook of monetary policy.
Spot gold rose 0.4% to $1,884.46 per ounce by 10:34 am ET (1434 GMT). US gold futures fell 1.3% to $1,884.60 per ounce.
“President Trump’s retracement from “no stimulus negotiation” to “unilateral relief measures” has helped support gold prices despite the US dollar only weakening slightly,” said Jeff Klearman, portfolio manager at GraniteShares.
Gold prices had declined nearly 2% on Tuesday after US President Donald Trump announced a halt in additional stimulus negotiations until after the Nov. 3 presidential election.
However, he later suggested new payroll assistance to US passenger airlines.
“Coronavirus-related demand destruction concerns are still abound, meaning sooner or later, a fiscal stimulus package will likely be passed and the Fed will continue its unprecedented accommodative monetary policy,” Klearman said.
Investors now await minutes from Fed’s Sept. 15-16 policy meeting at 1800 GMT. Fed Chair Jerome Powell on Tuesday called for more help for businesses and households to keep a nascent economic recovery from faltering.
“There is an anticipation about the level of inflation as a result of stimulus ... and that could be hedged by gold,” said Jeffrey Sica, president and chief investment officer of Sica Wealth Management.
He added “there will be a great potential of not having an election result in November, which will help gold prices as a flight to safety.”
Gold is seen as a safe-haven investment due to its ability to retain value even at times of financial or political uncertainty. It is also used as a hedge against inflation.
Elsewhere, silver climbed 2.7% to $23.70 per ounce, platinum was up 0.9% to $856.15, while palladium rose 0.9% to $2,362.41.
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