Gold price dips as Beijing claims virus cases contained

Spot gold was 0.1% lower, trading at $1,724.55 per ounce by 1:30 p.m. ET, after rising to a near one-week high of $1,736.49 earlier in the day. Gold futures also fell 0.4% to $1,721.40 per ounce on the Comex in New York.

“Gold is softer and giving up earlier gains due to some positive reports from Beijing that they have contained the coronavirus outbreak,” Edward Moya, senior market analyst at broker OANDA, told Reuters.

Initial claims for state unemployment benefits dropped for the 11th straight week, falling further away from a record high of 6.86 million in late March.

“However, the long-term prospects are still supporting higher moves as the virus woes are still there. The central bank stimulus with lower interest rates are not going way anytime soon,” Moya added.

US Federal Reserve Chair Jerome Powell told lawmakers this week that “significant uncertainty remains about the timing and strength of the recovery,” with output and employment still far below pre-pandemic levels.

Precious metals trading group MKS PAMP admits the lack of purchases could hold bullion down despite the current risks. It said in a note:

“Ongoing risks to the global economic recovery, especially with regards to recent spikes in virus cases in both the US and China continue to underpin (gold’s) price action. However, a lack of physical demand is likely to see gold hold $1,700-$1,750 over the near term.”

“At the moment, you’ve captured the dichotomy in the market — the risk-on, risk-off shifts,” Kieran Clancy, assistant commodities economist at Capital, told Bloomberg.

“Clearly there are still risks on the horizon, and the market is still sensitive to those risks. It’s encouraging to see pickups in the data, but they’re coming from very low lows.”