NEW YORK: 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 announcing at its Jackson Hole symposium that it plans to taper its economic support.
Spot gold was steady at $1,804.99 per ounce by 1:47 p.m. EDT (1747 GMT), having earlier hit its highest since Aug. 5. US gold futures settled up 0.1% at $1,808.90.
"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," said Jim Wyckoff, senior analyst at Kitco Metals.
Reflecting the economic impact of the virus was data showing US business activity growth slowed in August.
"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."
Gold is considered as a hedge against inflation, while rising interest rates boost the opportunity cost of holding non-yielding gold.
Fawad Razaqzada, market analyst with ThinkMarkets, also noted that $1,805-$1,810 was significant for gold since the bearish trend line converges with the 200-day average there.
"We may see a potential drop, not least on profit-taking, to the next support around $1,795 and if gold takes out Monday's low at $1776, that could trigger fresh technical selling."
Comments
Comments are closed for this article.