Gold rebounds on political tensions, investors eye ECB policy outcome
Gold prices surged, rebounding from a 4-week low hit in the prior session as lingering political tensions boosted safe-haven demand. However, it was still near their lowest in over a week as equities were set to extend their gains on economic optimism.
Asian shares rallied to a 2-month high as government stimulus expectations bolstered investor confidence in an economic recovery from the global coronavirus pandemic. Governments around the world have gradually started to ease lockdown restrictions imposed to contain the coronavirus.
Spot gold surged 0.2 percent to $1,701.04 per ounce by 0723 GMT, having touched a low of $1,689.58 the day before, its lowest since May 7. On Wednesday, it fell 1.7 percent to reach its lowest since May 27. U.S. gold futures were flat at $1,704.90.
On Wednesday, tensions between U.S.-China intensified after U.S. President Donald Trump's administration barred Chinese passenger carriers from flying to the United States starting on June 16. While some sources said that the U.S. is expected to impose restrictions on at least four additional state-run Chinese media outlets.
The dollar index was trading 0.3 percent up at 97.59, having touched a low of 97.19 on Wednesday, its lowest since March 12 and fallen about 1 percent during this week. The yield on the benchmark 10-year eased slightly to 0.7425 percent.
Investors now await the European Central Bank meeting later in the day, where policymakers are expected to increase the size of its 750 billion euro ($669 billion) Pandemic Emergency Purchase Programme. Markets also eye Friday’s U.S. Labor Department May jobs report, which is likely to show the unemployment rate rising to a post-World War II high of nearly 20 percent from 14.7 percent in April.