Gold steadies above $1,800 as virus fears, US-China tensions rise

Spot gold was up 0.1% at $1,808.85 per ounce by 0453 GMT. U.S. gold futures eased 0.2% to $1,808.90

By Brijesh Patel

(Reuters) - Gold prices edged higher on Wednesday, holding firm above the psychological $1,800 level, as worries over surging coronavirus cases and simmering U.S.-China tensions boosted demand for the safe-haven metal.

Spot gold was up 0.1% at $1,808.61 per ounce by 0240 GMT. U.S. gold futures eased 0.1% to $1,811.40.

"Demand appears firm for gold on any dips to the $1,800 regions for now with investors hedging Covid-19 risks, most especially after the renewed lockdown in California," said Jeffrey Halley, a senior market analyst at OANDA.

"Although the mood on Wall Street returned to upbeat, the record amounts of bank bad debt provisioning overnight, and comments from the Federal Reserve, are giving bullish investors pause for concern."

Coronavirus cases continue to rise in the United States, with many states temporarily halting their reopening of their economies to stem the outbreak, which has infected more than 13 million people worldwide so far.

Fed officials warned on Tuesday the U.S. economy faces a longer recovery from the pandemic, and economic pain could still worsen as cases mount.

Simmering tensions between Washington and Beijing also loom large, after U.S. President Donald Trump signed an executive order ending preferential treatment for Hong Kong and also shut the door on "Phase 2" trade negotiations with China.

The resultant safe-haven demand helped gold maintain its positive trajectory despite a strong rally in U.S. stocks overnight.

Reflecting increased investor interest in bullion, holdings of SPDR Gold Trust, rose 0.2% to 1,206.89 tonnes on Tuesday- its highest since April 2013.

Investors now await the Bank of Japan's policy decision later in the day for economic projections and any reassurances of additional stimulus measures.

Elsewhere, palladium rose 0.3% to $1,966.71 per ounce, platinum gained 0.2% to $827.82 and silver edged 0.1% higher to $19.22.

 

(Reporting by Brijesh Patel in Bengaluru; Editing by Shailesh Kuber)