May 11, 2020 / 10:31 AM / 24 days ago

PRECIOUS-Gold holds steady as dollar gains, risk sentiment improves

 (Updates prices)
    * Dollar firms, equities move higher
    * Specs cut bullish positions in gold in week to May 5 -
CFTC

    By Brijesh Patel
    May 11 (Reuters) - Gold held steady on Monday as pressure
from a firmer dollar and an uptick in risk appetite after many
countries eased lockdowns was offset by concerns over a pick-up
in new coronavirus cases, which kept some investors on edge.
    Spot gold        was little changed at $1,702.64 per ounce
by 1204 GMT, having lost about 1% on Friday. U.S. gold futures
        fell 0.4% to $1,707.30 per ounce.
    "There is still so much uncertainty out there, with some
economies starting to ease up on their restrictions and others,
like South Korea for example, seeing the return of the infection
rate," said INTL FCStone analyst Rhona O'Connell.
    "However, in the near term, expect gold prices to be steady
around these levels or to drift a little lower because there is
a little bit more confidence in the economic recovery."
    The dollar index        gained 0.3% against a basket of
major currencies, limiting any recovery in gold after the
previous session's losses.       
    Optimism over a potential recovery in economic growth as
many countries starting to ease virus-driven lockdowns boosted
investors' sentiment towards riskier assets.            
    Japan said it could end its state of emergency in many
regions this week, and New Zealand said it could ease
restrictions on Thursday. Britain has also set out plans to ease
the lockdown, while in France shops re-opened on Monday.
    However South Korea warned of a second wave of the new
coronavirus as infections rebounded to a one-month high, while
the rate of new cases accelerated in Germany.             
    Speculators reduced their bullish positions in COMEX gold
contracts in the week to May 5, the U.S. Commodity Futures
Trading Commission (CFTC) said on Friday.                     
    "Gold prices could climb noticeably if speculative investors
were to jump on the bandwagon – and there is certainly good
reason for them to do so," Commerzbank analysts said in a note.
    "They just need to look at the extremely expansionary
measures taken by central banks and governments, which will lead
to a massive increase in balance sheets and national debt
levels."
    The latest batch of poor economic readings out of the United
States underscored the impact of the virus and lifted
expectations of further stimulus measures from the Federal
Reserve.                         
    Gold tends to benefit from widespread stimulus measures from
central banks because it is widely viewed as a hedge against
inflation and currency debasement.
    Among other precious metals, palladium        eased 0.3% to
$1,876.52 an ounce, while platinum        fell 0.1% to $764.37
and silver        gained 0.4% to $15.50.

    
 (Reporting by Brijesh Patel in Bengaluru; Editing by Jan
Harvey)
  
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