By Brijesh Patel
(Reuters) – Gold prices edged higher on Tuesday, supported by a drop in U.S. bond yields and concerns over a relentless surge in Delta variant infections, although a stronger dollar kept bullion’s gains in check.
Spot gold was up 0.2% at $1,815.61 per ounce by 0653 GMT, after hitting a one-week low of $1,794.06 in the previous session. U.S. gold futures gained 0.5% to $1,817.90.
“The gold market is getting relief because of extremely low yields. But gold is competing with the dollar for safe-haven demand, so that is going to limit upside momentum over the near-term,” said Stephen Innes, managing partner at SPI Asset Management.
Benchmark 10-year Treasury yields were pinned near five-month lows. Lower yields reduce the opportunity cost of holding non-interest bearing gold.
Rising coronavirus cases across the United States and other countries fuelled fears of a pandemic resurgence, sending shockwaves through stock markets, as the highly contagious Delta variant appeared to be taking hold.
Gold is often used as a safe store of value during times of political and financial uncertainty.
However, safe-haven gains for the U.S. dollar limited gold’s appeal as the dollar index held firm near 3-1/2-month highs against its rivals. A stronger dollar makes gold more expensive for other currency holders.
“As the risk-off mood sends investors rushing towards destinations of safety, gold is likely to find some support,” Lukman Otunuga, analyst at FXTM, said in a note.
“Nevertheless, bears are still lingering and may snatch control if prices sink back below the $1,800 psychological level.”
European Central Bank policymakers are set for a showdown this week as they chart a new policy path amid growing fears of a third wave of coronavirus infections.
China kept its benchmark lending rate for corporate and household loans unchanged at its July fixing on Tuesday.
Silver eased 0.3% to $25.12 per ounce, palladium gained 0.5% to $2,607.38, and platinum was steady at $1,075.52.
(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu and Louise Heavens)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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