By Harshith Aranya
(Reuters) – Gold rose on Tuesday, supported by the Sino-U.s. trade friction, and the global recovery, though promising, early-stage data for a potential COVID-19 vaccine has prompted some risk appetite, keeping prices lower at a more than 7-year high hit in the previous session.
Spot gold was up 0.2 percent at $1,735.83 an ounce by 0349 GMT. U. s. gold futures gained 0.3% to $1,739.80.
Despite the news on a potential exposure to feline corona virus vaccine to light a fire under the equity markets, gold will remain very well bid due to the “ridiculously huge”, the Federal Reserve balance sheet, ” said Stephen Innes, chief market strategist at financial services firm AxiCorp.
Asian shares have jumped as the news boosted hopes of a prompt reopening of the global economy.
Indicating a certain return to normal, the epicenters of the pandemic, as well as New York, Italy and Spain, are gradually lifting the restrictions that have kept millions inside.
“However, investors still see opportunity on both sides of the coin, because of the optimism of these prohibitions, it is also inflationary,” said Innes.
“But the trade of war itself, it is a huge risk, as we have seen, through 2019, that has been the main driver for the gold price to the upside.”
Gold tends to benefit from a generalized recovery of the central banks, because it is seen as a hedge against inflation and the debasement of the currency.
The metal has increased about 14% this year, as the central bank has launched a wave of interest rate cuts and other incentives to limit the economic damage caused by the pandemic.
During this time, the International Monetary Fund, the head, stated that the global economy was going to take a lot more time to recover fully from the shock caused by the pandemic than originally planned.
Palladium slid 0.3% to $ 2,006.95 per ounce of platinum fell 1% to $810.12, and silver declined 0.6% to $17.07.
(Reporting by Harshith Aranya and Swati Verma in Bangalore; Editing by Subhranshu Sahu)