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PRECIOUS-Gold gains on investor bets for further monetary support

Published 10/11/2020, 09:25 pm
Updated 11/11/2020, 12:36 am
© Reuters.
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* More positive vaccine news negative short term for gold- analyst

* Interactive graphic tracking global spread of coronavirus: https://tmsnrt.rs/3mvcUoa (Updates prices)

By Asha Sistla

Nov 10 (Reuters) - Gold rebounded on Tuesday, rising more than 1%, as investors bet on continued monetary support from central banks to revive a pandemic-hit global economy.

Gold had fallen sharply on Monday as optimism for a COVID-19 vaccine lifted appetite for riskier assets.

Spot gold XAU= climbed 0.9% to $1,877.86 per ounce by 1321 GMT on Tuesday, while U.S. gold futures GCv1 rose 1.2% to $1,876.40.

Prices slumped as much as 5.2% on Monday after U.S. drugmaker Pfizer Inc (NYSE:PFE) PFE.N said its COVID-19 vaccine was more than 90% effective based on initial trial results. gold's gains to investors reassessing their positions after Monday's "euphoric moves", OANDA analyst Craig Erlam said a break above $1,900 would suggest gold might be realigning on likely monetary easing by the U.S. Federal Reserve and the return of its safe-haven status.

But more positive vaccine news will weigh on gold in the short term, Erlam added.

While vaccine optimism boosted risk appetite, concerns emerged over a mass roll-out of the new vaccine amid lingering uncertainties fuelled by surging COVID-19 cases globally. MKTS/GLOB

"We remain a long way from seeing an overt shift away from the easing monetary policy stance," said FXTM market analyst Han Tan.

"Central bankers are likely to remain data dependent in assessing recoveries in their respective economies, and would need more concrete proof beyond mere green shoots of vaccine-related hope before making an about-turn in their policy biases." stimulus and near-zero interest rates globally, which reduce the opportunity cost of holding non-yielding assets, have driven gold about 23% higher this year as the precious metal is considered a hedge against currency debasement and inflation.

Dallas Fed President Robert Kaplan said on Monday the resurgence of COVID-19 poses risks to the economy, while Cleveland Fed President Loretta Mester said the central bank's emergency lending programmes are still needed. XAG= rose 0.1% to $24.10 an ounce. Platinum XPT= inched up 0.1% to $866.81 and palladium XPD= was up 0.1% to $2,480.22.

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