Gold eases as coronavirus treatment hopes boost risk sentiment

Gold prices declined, extending previous session losses as risk sentiment improved after the U.S. drug regulator authorised the use of blood plasma from recovered COVID-19 patients as a treatment option for the disease.

Spot gold was trading down 0.3 percent to $1,934.78 per ounce by 0704 GMT, having hit a low of $1911.58 on Friday, its lowest since August 12. U.S. gold futures eased 0.2 percent to $1,943.10.

Asian stocks rose for a second straight session following the announcement from the U.S. Food & Drug Administration to authorise the use of blood plasma from patients who have recovered from coronavirus.

Investor sentiment around the dollar improved on Friday after data showed U.S. business activity snapped back to the highest since early 2019 this month as companies in both the manufacturing and services sectors saw a resurgence in new orders. However, quantitative easing that the Fed has deployed so far weighed on the dollar.

Markets now await U.S. Federal Reserve Chairman Jerome Powell’s speech on Thursday at the opening day of the Kansas City Fed’s annual symposium for any hints about how aggressively the central bank will try to manage the long-term recovery from the coronavirus pandemic. This year the meeting will be held online, and not at Jackson Hole, Wyoming because of the coronavirus pandemic.

Investors will also closely watch this week's data for clues on the global economy, including a second estimate of U.S. GDP for the second quarter as well as weekly jobless claims and some second tier Asian indicators.

On Sunday, Trump raised the possibility of decoupling the U.S. economy from China as part of a broad-ranging dispute with Beijing over China’s role in global trade and advanced technology.

The greenback against a basket of currencies traded 0.1 percent down at 93.12, having touched a high of 93.47 on Friday, its highest since August 12. Last week the dollar index fell to the lowest in more than 2-years. The U.S. Treasury yields declined, with the benchmark 10-year note yield trading at 0.632 percent.