Gold eases on firm dollar; rising virus cases lend support

Gold prices eased on Wednesday on hopes of a potential COVID-19 drug and a stronger U.S. dollar, but the fall was limited due to worries about surging cases of the novel coronavirus in Beijing.

Spot gold was down 0.2% at $1,723.20 per ounce by 0302 GMT, holding a tight $6 narrow range. U.S. gold futures fell 0.3% to $1,731.

"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 U.S. states on Tuesday.

However, the dollar rose 0.1% against its rivals, making gold expensive for holders of other currencies.

Meanwhile, a record increase in U.S. retail sales in May supported views the U.S. 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 the safe-haven, which 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 a disputed border site, while North Korea rejected a South Korea offer to send special envoys and vowed to send back troops to the border.

Elsewhere, palladium dropped 0.9% to $1,914.64 per ounce, silver fell 0.3% to $17.34, and platinum lost 0.9% to $813.07.

-Published on June 17th, 2020