Futures & Commodities

Gold slips on profit taking; stimulus bets limit losses

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Twenty kilogram gold and silver bricks sit at the ABC Refinery smelter in Sydney, New South Wales, Australia, on Thursday, July 2, 2020.
David Gray | Bloomberg via Getty Images

Gold prices eased from a two-week high on Thursday as investors booked some profit following a rally in the previous session, while expectations for further stimulus and a weaker U.S. dollar limited losses.

Spot gold was down 0.2% to $1,867.56 per ounce at 01:57 p.m. EST (1857 GMT), after hitting its highest since Jan. 8 at $1,874.86 earlier in the day. Bullion had gained 1.7% on Wednesday.

U.S. gold futures settled little changed at $1,865.90 per ounce.

"It is nothing more than some simple profit taking after the recent rally prompted by expectations for further stimulus coming from the Biden (administration)," said David Meger, director of metals trading at High Ridge Futures.

"However, the prospect of further stimulus along with a weaker dollar continues to support gold in the bigger picture perspective."

Joe Biden was sworn in as the president of the United States on Wednesday, with markets focusing on his proposed $1.9 trillion dollar coronavirus stimulus package, which will require approval from a divided Congress.

Gold is seen as a hedge against inflation and currency debasement, which can be caused by the massive stimulus measures.

It remained to be seen whether the stimulus would go through both houses of Congress as quickly as Biden's expectations and "that's probably one of the reasons why gold hasn't been going huge", said StoneX analyst Rhona O'Connell.

The dollar, on the other hand, slipped to a one-week low against key rivals, making greenback-denominated bullion cheaper for investors holding other currencies.

Meanwhile, the number of Americans filing new applications for unemployment benefits decreased modestly last week.

Spot silver edged 0.1% higher to $25.83 per ounce. Platinum rose 1% to $1,120.70, while palladium eased 0.2% to $2,366.45.