Precious: Gold firms above $1,800/oz on bets Fed delays taper due to virus spike
24/08/2021 16:01
* U.S. business activity growth slowed in August - IHS
Markit
* A recession bringing lasting support to gold unlikely -
analyst
* Palladium extends gains, up over 2.5%
(New throughout, updates prices, market activity and comments)
By Nakul Iyer
Aug 24 (Reuters) - Gold consolidated above $1,800 on Tuesday
as some investors bet the recent surge in COVID-19 cases could
steer the U.S. Federal Reserve away from announcing at its
Jackson Hole symposium that it plans to taper its economic
support.
Spot gold XAU= rose 0.1% to $1,806.39 per ounce by 12:21
p.m. EDT (1621 GMT). U.S. gold futures GCv1 gained 0.2% to
$1,808.90.
On Monday, bullion jumped 1.4% as the dollar retreated and
investors grew concerned rising cases of the Delta variant could
prompt the Fed to delay a winding down of economic support.
Also, data showed U.S. business activity growth slowed in
August, while Asia's robust economic recovery from last year
lost steam. urn:newsml:reuters.com:*:nW1N2P6046
"The tenure of the marketplace has pivoted from thinking the
Fed would lean hawkish at Jackson Hole symposium to one of the
coronavirus keeping the Fed from doing anything as soon as they
might have wanted to, and maybe even this year," said Jim
Wyckoff, senior analyst at Kitco Metals.
Gold is considered as a hedge against inflation, while
rising interest rates boost the opportunity cost of holding
non-yielding gold.
"What might be gold-market sensitive is the Fed might start
to say inflation isn't as transitory as thought and that could
prompt them to tighten policy down the road, though the impact
of the virus should override inflationary concerns for now."
Gold's latest uptick came despite outflows from
exchange-traded funds. GOL/ETF
"Even though short-term hiccups to economic activity are a
risk to watch, a renewed recession, bringing lasting support to
gold, still seems very unlikely," said Carsten Menke, Head Next
Generation Research, Julius Baer in note.
Silver XAG= rose 0.7% to $23.83 per ounce, while platinum
XPT= fell 0.4% to $1,009.44.
Palladium XPD= was up 2.5% at $2,459.13. Prices climbed
5.5% on Monday.
(Reporting by Nakul Iyer in Bengaluru; Editing by Mike Harrison
and David Gregorio)
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