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PRECIOUS-Gold climbs to near 8-year peak as growing virus fears lift demand

Published 01/07/2020, 02:11 pm
Updated 01/07/2020, 06:06 pm
© Reuters.

* Equities up as strong data drives rebound hopes

* Spot gold may test resistance at $1,789/oz-technicals

* Interactive graphic tracking global spread of coronavirus: open https://tmsnrt.rs/3aIRuz7 in an external browser. (Updates prices)

By Brijesh Patel

July 1 (Reuters) - Gold rose to its highest in nearly eight years on Wednesday, as demand for the safe-haven metal was boosted by worries about the global economic impact of surging coronavirus infections in many countries.

Spot gold XAU= was up 0.4% at $1,788.06 per ounce by 0743 GMT, its highest level since early October 2012.

U.S. gold futures GCcv1 rose 0.4% to $1,807.10.

"Gold as a bond alternative and as a general hedge is still dominant. The macro-factor driving this right now is that there is still a high degree of uncertainty about global growth outlook going forward," said IG Markets analyst Kyle Rodda.

"On top of this, while inflation expectations have picked-up a little, markets are betting that policymakers will continue to do what they can to suppress yields in order to stimulate economies and support financial conditions."

Lower bond yields reduce the opportunity cost of holding non-interest bearing gold.

A spike in U.S. coronavirus cases in the recent days has cast a shadow on hopes for a quicker economic recovery, driving inflows into safe-haven assets. Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell pledged to do more for the economy as it battles the impact of a pandemic that has infected more than 10.48 million people worldwide so far. recent better-than-expected economic readings provided some relief to nervous investors, supporting demand for Asian equities. MKTS/GLOB

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Focus now shifts to the U.S. Institute for Supply Management's purchasing managers' index (PMI) for manufacturing due later in the day.

On the technical front, spot gold may test a resistance at $1,789 per ounce, a break above which could lead to a gain into $1,795-$1,806 range, Reuters technical analyst Wang Tao said. TECH/C

Elsewhere, palladium XPD= eased 0.1% to $1,927.87 per ounce, while platinum XPT= rose 1.2% to $826.23 and silver XAG= gained 0.9% at $18.28.

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