Gold steady as second Covid-19 wave fears in Beijing weigh on risky assets

Spot gold was steady at $1,729.40 per ounce. US gold futures eased 0.1% to $1,734.90

Gold prices were little changed on Monday after posting their best week since early April as fears of a second wave of coronavirus infections in Beijing cut investors' appetite for riskier assets.

Spot gold was steady at $1,729.40 per ounce as of 0316 GMT. U.S. gold futures eased 0.1 per cent to $1,734.90.

The metal climbed 2.6 per cent last week, posting its biggest weekly gain since April 10.

"The economy is not doing well, we got Covid-19 again and a low interest rate environment, I think gold remains bid," said Stephen Innes, chief market strategist at financial services firm AxiCorp.

"But, we need significant policy input from the US Federal Reserve or governments to add that fourth level of stimulus to get gold to bounce higher."

After weeks with almost no new coronavirus infections, Beijing has recorded dozens of new cases in recent days, while new virus cases and hospitalisations in record numbers swept through more US states.
 

Rising concerns about a resurgence of the disease dented risk sentiment among investors, sending Asian stock markets and oil prices lower.

Further supporting bullion, the dollar index eased 0.2 per cent.

The Fed expects household finances and business balance sheets to suffer "persistent fragilities" due to the shock to economic activity arising from the pandemic.
 

Underscoring the impact of the virus, data showed China's industrial output expanded less than expected in May as the country struggles to get back on track.

Holdings of world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.1 per cent to 1,136.22 tonnes on Friday.

Speculators cut their bullish positions in COMEX gold and silver contracts in the week to June 9, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

Elsewhere, palladium was down 0.1 per cent at $1,916.57 per ounce, silver fell 0.3 per cent to $17.39, platinum was steady at $805.17.