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Gold steadies amid concerns over rising virus cases
Gold prices rose, supported by a softer dollar, while concerns about surging COVID-19 cases in the United States and logistical challenges over the mass roll-out of a potential vaccine further bolstered the safe-haven metal's appeal.
Spot gold rose 0.05 percent to $1,878.31 per ounce by 0720 GMT, having hit a high of $1965.57 on Monday, its highest since September 16. U.S. gold futures were flat at $1,876.30.
The metal fell 4.6 percent on Monday, its biggest daily fall since August 11 after drugmaker Pfizer said its COVID-19 vaccine was more than 90 percent effective based on initial trial results.
The dollar eased against its rival currencies as optimism about a coronavirus vaccine was offset by worries about how the drug will be delivered and by a surge of new infections in the United States.
Initial optimism about coronavirus vaccine testing boosted the dollar against the yen and the Swiss franc, but the momentum started to fade because there are still several obstacles to clear before a vaccine can be distributed.
On Tuesday several U.S. states imposed restrictions to curb the spread of the coronavirus as hospitalizations soared, highlighting the difficulty in containing the virus as winter in the Northern Hemisphere approaches.
Federal Reserve policymakers said that surging coronavirus cases threatened to slow the U.S. economic growth once more in coming months and that more targeted government aid was needed.
Risk sentiment improved as negotiators from the European Parliament and EU governments agreed the details of the 2021-2027 EU budget, in a crucial step for the activation of the bloc’s 1.8 trillion euro recovery package. Moreover, comments from UK government officials that a deal was imminent on a post-Brexit trade agreement with the European Union further supported risk appetite.
New Zealand’s central bank introduced a new funding programme on Wednesday that would reduce costs for lenders, while it held the official cash rate (OCR) steady at 0.25 percent and re-iterated rates would stay there until March 2021.
The greenback against a basket of currencies traded 0.05 percent down at 92.70, having touched a low of 92.13 on Monday, its lowest since September 1. The U.S. Treasury yields rose, with the benchmark 10-year note yield trading at 0.982 percent and the 30-year yield at 1.748 percent.