Gold prices surged, retreating from a 1-week low hit earlier in the session, boosted by renewed fears over economic recovery and uncertainty around the U.S. presidential election after President Donald Trump’s COVID-19 diagnosis.
Spot gold traded 0.6 percent up at $1,890.06 per ounce by 0744 GMT, having hit a low of $1872.89 earlier, its lowest since September 28. On Tuesday, the safe-haven metal rose to a high of $1921.27, but retraced to close nearly 1.85 percent lower at $1878.17. U.S. gold futures were down 0.8 percent at $1,893.85.
U.S. President Donald Trump abruptly cancelled talks on economic stimulus with Democrat lawmakers until after the November 3 presidential election, heightening downside risks for the U.S. economy.
Meanwhile, U.S. and European central bankers called for renewed government spending to support families and businesses hit by the pandemic.
Federal Reserve Chair Jerome Powell on Tuesday warned that the U.S. economy could slip into a downward spiral if the coronavirus is not effectively controlled and authorities did too little to support the economic rebound.
European Central Bank President Christine Lagarde said a second wave of the coronavirus pandemic risks are delaying the eurozone’s economic recovery, reinforcing expectations that more ECB stimulus is likely in the months ahead.
The dollar index eased against its rival currencies as Trump announcement stoked risk aversion, bolstering the safe-haven metal. The dollar rose in early trade after Trump returned to the White House from hospital, where he received treatment for the coronavirus. However, medical professionals cautioned Trump’s early discharge from hospital puts others at risk of infection.
Markets now await the minutes from the Fed’s most recent meeting and comments from several Fed speakers later in the day for further signs of how central bankers view the outlook. Investors would also watch out for vice presidential debate due later in the day.
The greenback against a basket of currencies traded 0.1 percent down at 93.72, having touched a low of 93.34 on Tuesday, its lowest since September 21. The U.S. Treasury yields rose, with the benchmark 10-year note yield trading at 0.769 percent and the 30-year yield at 1.572 percent.
