Gold gains slightly as US stimulus hopes offset cash rush
Gold prices inched up in volatile trade on Wednesday, as growing hopes for a massive US economic stimulus package to stem the coronavirus outbreak's economic toll offset liquidation by investors looking for cash and to cover losses in other assets.
Spot gold was up 0.1% at $1,611.73 per ounce by 0230 GMT (0530 Riyadh time), after rising as much as 1.6% earlier in the day. The metal jumped more than 3% in the previous session.
US gold futures climbed 0.8% to $1,673.60.
Benchmark spot gold prices continued to trade below US gold futures in a sign that the market is worried air travel restrictions and precious metal refinery closures will hamper shipments of bullion to the United States to meet contractual requirements.
"Gold has benefited from the expectation of the massive stimulus measures likely to be approved by the United States. Investors feel gold might hold its value," said John Sharma, an economist at National Australia Bank.
He, however, said investors were in two minds - whether to go for the safety of gold or liquidate positions to cover loses on other commodities and seek refuge in hard cash.
Senior US Democrats and Republicans said on Tuesday they were close to a deal on a $2 trillion stimulus package to limit the pandemic's economic toll.
Asian shares extended their rally in the wake of Wall Street's big gains as U.S. Congress appeared closer to passing the stimulus package.
Indicating investors' appetite for gold, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 1.3% to 935.98 tons on Tuesday.
Among other precious metals, palladium climbed 0.6% to $1,942.87 an ounce and platinum gained 2.1% to $722.55.
Both the metals surged more than 10% in the previous session on the back of a lockdown in major producer South Africa. Silver rose 0.2% to $14.29 per ounce.