Gold firms above $1,800/oz on bets virus spike may delay Fed taper

Gold consolidated above $1,800 on Tuesday as some investors bet the recent surge in COVID-19 cases could steer the US Federal Reserve away from tapering its economic support at its Jackson Hole symposium.

Spot gold rose 0.1% to $1,806.21 per ounce by 10:35 a.m. EDT (1435 GMT). US gold futures also gained 0.1% to $1,808.20.

Bullion hit a near-three week high on Monday, bolstered by a retreat in the dollar and on expectations that rising cases of the Delta variant could prompt the Fed to delay a winding down of economic support measures.

Reflecting the economic impact of the virus, was data showing US business activity growth slowed in August, while Asia's robust economic recovery from last year lost steam.

Boosting gold, "the tenure of the marketplace has pivoted from thinking the Fed would lean hawkish at Jackson Hole symposium to one of the coronavirus keeping the Fed from doing anything as soon as they might have wanted to, and maybe even this year," Jim Wyckoff, senior analyst at Kitco Metals, said.

Gold's woes mount as dollar, yields rally on Fed taper bets

A hike in interest rates translates into increased opportunity cost of holding non-yielding gold.

"What might be gold market sensitive is the Fed might start to say inflation isn't as transitory as thought and that could prompt them to tighten policy down the road, though the impact of the virus should override inflationary concerns for now."

The precious metal is also considered as a hedge against inflation.

Gold's latest uptick also came despite outflows from exchange-traded funds.

"Even though short-term hiccups to economic activity are a risk to watch, a renewed recession, bringing lasting support to gold, still seems very unlikely," said Carsten Menke, Head Next Generation Research, Julius Baer in note.

Silver rose 1.1% to $23.91 per ounce, while platinum gained 0.2% to $1,015.35.

Palladium was up 2.6% at $2,461.55. Prices climbed 5.5% on Monday.