Gold consolidates within narrow ranges as signs of recovery offset worries over coronavirus surge

Gold prices consolidated within narrow ranges as the swing in sentiment between hopes of quick economic recovery and fears of resurgent coronavirus cases kept markets on edge. However, the safe-haven metal was heading for their biggest quarterly rise in more than 4-years as concerns over increasing coronavirus cases around the world weighed on investor sentiment.

Spot gold was trading flat at $1,772.50 per ounce by 0825 GMT, having touched a high of $1,779.44 on Wednesday, its highest since October 2012. The safe-haven metal gained more than 12 percent this quarter, putting it on track for its best quarter since end-March 2016, while it was also set for its third straight monthly gain. U.S. gold futures were 0.1 percent up at $1,783.50.

A recent resurgence in coronavirus infections had led some investors to question their optimism on the global economy. Over the weekend, the number of confirmed COVID-19 cases worldwide exceeded 10 million and deaths surpassed 500,000. Some economies have started to reverse reopenings and reclose businesses to slow the spread of the coronavirus.                         

Investor sentiment slightly improved as upbeat U.S. housing data and a survey in China showing a quickening in activity in its factory sector, hopeful signs for a global economy still struggling to recover from the impact of the COVID-19 crisis. Contracts to buy the U.S. previously owned homes rebounded by the most on record in May, suggesting the housing market was starting to turn around. U.S. Pending Home Sales Index surged 44.3 percent in May, compared to economists’ forecast for an 18.9 percent rise.              

Data released earlier showed China’s factory activity expanded at a faster pace in June, beating expectations of a slowdown from last month. China's manufacturing Purchasing Managers’ Index rose to a 3-month high of 50.9 in June from 50.6 in May, while the services sector PMI also expanded at a faster pace compared to the previous month.

The greenback against a basket of currencies traded 0.2 percent higher at 97.63, having touched a low of 96.39 last week, its lowest since June 11. The U.S. Treasury yields edged up, with the benchmark 10-year note yield trading at 0.633 percent.

Investors shrugged off news that China’s parliament passed national security legislation for Hong Kong that will increase Beijing’s control over the former British colony.

Markets now await U.S. non-farm payrolls data due on Thursday, which is expected to show U.S. employers added 3 million jobs in June.