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PRECIOUS-Volatile gold rebounds above $1,900 as UK economy slumps

Published 12/08/2020, 08:23 pm
Updated 12/08/2020, 11:06 pm
© Reuters.
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* Gold could see more consolidation in near-term- analyst

* Silver jumps as much as 6%

* Britain's economy shrank by a record 20.4% in Q2

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

By Nakul Iyer

Aug 12 (Reuters) - Gold rose above the $1,900 barrier on Wednesday as dire UK economic data renewed fears over a coronavirus-led slowdown and prompted a rebound in the metal after its steepest sell-off in over seven years in the previous session.

Spot gold XAU= , which fell as much as 6.2% on Tuesday, rose about 1% to $1,929.63 per ounce by 1218 GMT, paring sharp losses from earlier in the Asian session. gold futures GCcv1 slipped 0.3% to $1,939.90 per ounce, while silver XAG= gained 0.9% to $25.02 per ounce, after slumping 15% on Tuesday.

"It's a little bit like a heavy rain after a good spell of hot weather," said independent analyst Ross Norman.

"Gold is bouncing back very strongly. Sentiment has not been damaged and by extension, you could argue that it's created an opportunity for those who maybe missed the boat on the rally to get in again."

Underscoring the economic damage caused by the pandemic, Britain's economy shrank by a record 20.4% in the second quarter, the most severe contraction reported by any major economy so far. in spot gold, which is seen as a safe haven during times of economic turmoil, were also helped by a weaker dollar, whose recent uptick was halted by deadlock in Washington over a stimulus package. USD/ could be some consolidation in the near term, but the fundamental drivers pushing the metal higher remain intact," said FXTM analyst Lukman Otunuga.

"Given U.S. (10-year) real yields have pulled back above minus 1% for the first time this month, this is dulling some of gold's allure and encouraging (some) investors to offload bullion."

Bullion has gained 27.5% this year, with central banks flooding the economy with money to ease the damage from the global coronavirus crisis, fuelling fears of inflation and currency debasement.

Platinum XPT= fell 0.5% to $925.81 per ounce, while palladium XPD= rose 0.8% to $2,106.47 per ounce.

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