Gold gains as rising COVID-19 cases attract safe-haven bids

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Gold prices climbed on Tuesday as concerns over a surge in COVID-19 cases due to the Delta variant lured investors to the safe-haven metal, with a dip in U.S. Treasury yields providing a further boost.

Spot gold was up 0.3% to $1,818.45 per ounce by 10:30 a.m. EDT, while U.S. gold futures gained 0.6% to $1,819.40.

The precious metal has jumped about 4.3% from more than a two-month low hit last month, but is down 4% since the start of the year.

“A lot of people in the gold market have taken their eyes off the ball this year, but if we get more bad news on the COVID front and equities remain weak, you could get just that flight- to-safety buy in a market that can wake up pretty quick,” said Bob Haberkorn, senior market strategist at RJO Futures.

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With inflation, or potentially stagflation, and COVID-19 variants, gold could move higher, especially with bond yields trading at such low levels, Haberkorn added.

A surge in coronavirus cases in the United States and other countries dulled sentiment in broader markets, with global equities extending their longest losing streak in nearly 18 months.

Gold, seen as a safe store of value, tends to benefit during times of political and financial uncertainty.

Benchmark 10-year Treasury yields touched more than a five-month low, reducing the opportunity cost of holding non-interest bearing gold.

A firm U.S. dollar, however, challenged gold’s appeal, as the currency scaled a 3-1/2-month high and sent gold to a one-week low in the last session.

Commerzbank said in a note that gold’s recent weakness would likely only be temporary and it would recover noticeably as soon as the headwind of an appreciating dollar abated.

Elsewhere, platinum fell 0.5 to $1,069.98 per ounce, palladium rose 0.5% to $2,608.77 and silver eased 0.6% to $25.05. (Reporting by Nakul Iyer in Bengaluru Editing by Paul Simao)

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