Gold held steady near a more than eight-year high on Wednesday, with investors hitting pause on a rally fuelled by a surge in coronavirus cases and hopes of more stimulus measures from the US Federal Reserve. Spot gold was little changed at $1,794.62 per ounce by 0459 GMT (10:29 am in India), after hitting its highest since November 2011 at $1,796.93 on Tuesday, just a few dollars away from the key level of $1,800.
US gold futures eased 0.1 per cent to $1,807.80 per ounce.
“The main focus continues to be on the US,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.
“If the curve continues to steepen and the virus unabated, we are going to break $1,800 just for the fact that the Fed will have to be forced to add more stimulus.”
The US coronavirus outbreak crossed a grim new milestone of more than 3 million infections as more states reported record numbers of new cases.
Compounding economic concerns, the European Commission on Tuesday forecast the euro zone would drop deeper into recession this year and rebound less steeply in 2021 than previously thought.
“The health, financial and economic uncertainties generated by the COVID-19 pandemic and its aftermath are likely to continue to support gold’s rally well into 2021, but at a reduced level,” HSBC analysts said in a note.
Indicative of sentiment, holdings of SPDR Gold Trust rose 0.7 per cent on Tuesday.
Federal Reserve officials expressed concern that the surge in virus cases threatened to pinch consumer spending and job gains. One Fed policymaker pledged more support ahead from the US central bank.
Gold tends to benefit from widespread stimulus measures from central banks because it is widely viewed as a hedge against inflation and currency debasement.
Spot gold faces a resistance at $1,796 per ounce, a break above which could lead to a gain to $1,831, said Reuters technical analyst Wang Tao.
Palladium gained 0.3 per cent to $1,921.71 per ounce, platinum rose 0.2 per cent to $836.96 and silver edged 0.2 per cent higher to $18.34.