Gold rally loses steam as Trump plans to reopen U.S. economy

• Also lifting risk sentiment, a report detailed encouraging data from trials of U.S. drugmaker Gilead Sciences Inc's experimental drug remdesivir in severe COVID-19 patients.
• Further weighing on gold, the dollar index gained 0.2pc, holding near a one-week high against a basket of major currencies.

Spot gold was down 1.7pc at $1,688.93 an ounce by 1203 GMT. Earlier this week, it scaled a seven-year peak on concerns over the worst recession in decades.

"The latest sentiment drift to the positive side and narrative that a plan to return to normal is now afoot are seeing spot gold trading back through $1,700-an-ounce technical support," Saxo Bank analyst Ole Hansen said.

Global financial markets drew comfort from Trump's plans for a gradual reopening of the U.S. economy, overshadowing anxiety over data showing China that suffered its worst quarterly economic contraction on record.

Also lifting risk sentiment, a report detailed encouraging data from trials of U.S. drugmaker Gilead Sciences Inc's experimental drug remdesivir in severe COVID-19 patients.

Further weighing on gold, the dollar index gained 0.2pc, holding near a one-week high against a basket of major currencies.

"Investors are celebrating, perhaps a little too early, the apparent effectiveness of the Gilead drug in treating coronavirus and speeding up patients' recovery from it," ActivTrades chief analyst Carlo Alberto De Casa said in a note.

"In this scenario, they are seeing less need to increase the percentage of gold in their portfolio and are moving back to some more risk-on assets."

The pandemic, which has infected more than 2 million people globally and killed 143,744, has battered economies and prompted central banks to roll out a wave of monetary support measures.

"While policymakers are eager to limit the economic damage, the reopening of their respective countries could be upended by a swift resurgence of the coronavirus," FXTM analysts said in a note.

Gold tends to benefit from widespread stimulus measures from central banks because it is widely viewed as a hedge against inflation and currency debasement.

Lower interest rates also cut the opportunity cost of holding non-yielding bullion.

U.S. gold futures dropped 1.4pc to $1,707, narrowing their lead over London spot prices, signalling hopes for an improvement in strained supply chain logistics that have hampered bullion shipments to the United States to meet contract requirements.

Of the other precious metals, palladium rose 1pc to $2,175.29 an ounce, silver dipped 3.1pc to $15.14 and platinum was down 1.6pc at $770.92.