Economy

Gold slips as investors look to dollar for safety from virus woes

By Arundhati Sarkar

(Reuters) – Gold fell on Friday, hovering near last session’s over two-month low, as investors sought shelter in the dollar from rising coronavirus cases and uncertainties over the next U.S. stimulus to aid the economy.

Spot gold was down 0.3% to $1,862.95 per ounce by 10:50 a.m. EDT (1450 GMT), while U.S. gold futures eased 0.6% to $1,865.20 per ounce.

“The Republicans and Democrats are on the same page about putting some stimulus but they are not being able to decide the amount and that uncertainty is pushing investors towards the dollar,” said Edward Moya, senior market analyst at OANDA in New York.

For the week, gold is down 4.4% so far, the most in at least six weeks, as the dollar set for its best week since early April.

A stronger dollar makes commodities priced in the currency, like gold, more expensive for buyers using other monetary units.

A key lawmaker said Democrats in the U.S. House of Representatives are working on a $2.2 trillion coronavirus stimulus package that could be voted next week.

The Federal Reserve this week talked up the importance of more fiscal stimulus amid investor fears of another economic hit from the coronavirus pandemic.

Stocks in large parts of the world, the euro and copper, all headed for their worst weeks since the peak of the coronavirus turmoil, as investors dumped risky assets and chose the safety of the dollar.

The risk for gold bugs is limited to an extension of the global risk-off which catalyzed the dollar’s breakout, TD Securities analysts said in a note.

“On the other hand, the growth-scare has particularly impacted platinum, as a second wave may further hit the horrible diesel sales in Europe.”

Platinum was little changed at $849.05, but on-track for the biggest weekly percentage fall since March 20.

Silver fell 1.1% to $22.96 per ounce and headed for its worst week since March 20.

Palladium was down 0.4% to $2,217.94 per ounce.

(Reporting by Arundhati Sarkar and Diptendu Lahiri in Bengaluru; Editing by Marguerita Choy)

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