Gold gains as rising virus cases, easing dollar boost safe-haven appeal

Gold gained on Monday, as surging COVID-19 cases boosted the metal's safe-haven appeal, aided by a weaker dollar ahead of the U.S. Federal Reserve's meeting this week, while auto-catalyst palladium held below a record peak scaled last week.

Spot gold was up 0.1% at $1,778.22 per ounce by 0707 GMT. U.S. gold futures fell 0.1% to $1,775.70 per ounce.

"The COVID-19 situation in India and Japan is deteriorating. So that is boiling demand for safety, resulting in higher gold prices," said Margaret Yang, a strategist at DailyFX, adding that an easing dollar is further supporting prices.

Cases in India registered a record surge, while Japan declared states of emergency for Tokyo, Osaka and two other prefectures on Friday to combat a spike.

Speculators raised their bullish positions in COMEX gold in the week to April 20, the U.S. Commodity Futures Trading Commission said on Friday.

"On the other hand, investors are looking at very strong U.S. economic data released on Friday," said Yang, adding higher yields are capping gold's gains.

U.S. factory activity powered ahead in early April, while retail sales jumped to a record high in March and hiring accelerated.

Market participants now await Fed's two-day policy meeting starting on Tuesday. Although no change in policy is expected, the focus will be on Chair Jerome Powell's press conference.

Palladium rose 1.2% to $2,889.47 per ounce, after scaling a record peak of $2,925.14 on Friday.

"Strong industrial demand from the auto sector and investor interest saw palladium trade to a fresh record high... underpinned by Nornickel's lacklustre output numbers and continued strong demand from tightening emissions standards," said independent analyst Robin Bhar in a note.

"Palladium has been in deficit for several years and this is set to continue over coming years."

Silver fell 0.2% to $25.95 per ounce. Platinum was up 0.6% at $1,237.01.

 

(Reporting by Shreyansi Singh in Bengaluru; Editing by Vinay Dwivedi, Rashmi Aich and Uttaresh.V)