Futures & Commodities

Gold firms above $1,800 per ounce, propped up by virus woes

A one kilo Swiss gold bar and US dollars gold coins are pictured in Paris on February 20, 2020.
JOEL SAGET | AFP | Getty Images

Gold prices firmed above the key $1,800 level on Tuesday, underpinned by concerns over mounting coronavirus cases globally as many regions reintroduced curbs to restrict the outbreak.

Spot gold gained 0.4% to $1,809.83 per ounce. U.S. gold futures settled mostly unchanged at $1,813.40.

"There's an anticipation of more widespread shutdowns which is drawing people back to gold to hedge against the uncertainty," said Jeffrey Sica, founder of Circle Squared Alternative Investments.

"There's going to be a high likelihood that we'll see the U.S. Federal Reserve not only continue with the economic stimulus programmes, but in some cases accelerate them so that helps gold prices significantly."

Many parts of Asia are finding cause to pause the reopening of their economies as a jump in virus cases fans fears of a second wave, while California clamped new restrictions on businesses as infections soared.

The World Health Organization on Monday warned the pandemic would only get worse if countries failed to adhere to strict precautions.

Gold prices have risen over 19% so far this year, mainly benefiting from lower interest rates and widespread stimulus measures from major central banks as it is widely viewed as a hedge against inflation and currency debasement.

The dollar fell as the euro rose on optimism about the possibility of a European Union stimulus package.

Investors kept an eye on a growing U.S.-China rift over the South China Sea region, with Beijing's announcement that it will slap sanctions on Lockheed Martin for involvement in the latest U.S. arms sale to Chinese-claimed Taiwan.

Reflecting investor appetite, holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose 0.3% to 1,203.97 tonnes on Monday.

Elsewhere, palladium eased 0.7% to $1,966.50 an ounce and platinum edged down 0.3% to $826.05.

Silver gained 0.4% to $19.16, after hitting its highest since September 2019 on Monday.