Gold prices held steady on Wednesday, supported by concerns stemming from a surge in coronavirus infections in Beijing but with hopes for a potential COVID-19 drug and a stronger US dollar limiting their advance. Spot gold was flat at $1,727.26 per ounce by 12:47 pm, holding a narrow $6 range. US gold futures were mostly unchanged at $1,736.60 per ounce. “The attention remains elsewhere, mostly equity markets. However, COVID-19 nerves as Beijing shutdowns extend should offer support on any dips,” said Jeffrey Halley, senior market analyst at OANDA.
Beijing officials reported several new COVID-19 cases for the sixth consecutive day, while new infections hit record highs in six US states on Tuesday.
Offsetting upwards pressure on gold, the dollar rose 0.1 per cent against its rivals, making the metal more expensive for holders of other currencies.
A record increase in US retail sales in May supported views the US recession might be drawing to an end, with upbeat trial results for a COVID-19 treatment further aiding investor sentiment.
Geopolitical tensions and additional stimulus measures from global central banks also offered some support to bullion, which is often used as a safe store of value during times of political and financial uncertainty.
India reported 20 of its soldiers had been killed in clashes with Chinese troops at Galwan Valley in Ladakh, while tensions between North and South Korea simmered after North Korea blew up a joint liaison office set up as part of a 2018 peace agreement.
“On the one hand, we have geopolitical flashpoints igniting all over the map. On the other, the US dollar is more robust and competing for those same safe-haven flows,” said Stephen Innes, AxiCorp’s chief market strategist.
Elsewhere, palladium dropped 0.5 per cent to $1,921.50 per ounce, platinum lost 0.5 per cent to $816.64, while silver was steady at $17.41.