May 18, 2020 / 3:12 PM / 15 days ago

PRECIOUS-Gold eases off highs as vaccine hopes boost risk appetite

 (Updates prices, market activity, adds details)
    * Platinum, palladium markets to tighten in 2020- Johnson
Matthey 
    * U.S. recovery could extend into next year -Fed's Powell
    * U.S. equities recover over vaccine hopes
    * SPDR gold holdings hit seven-year highs
    * For an interactive graphic tracking the global coronavirus
spread, open tmsnrt.rs/3aIRuz7 in an external browser

    By Asha Sistla
    May 18 (Reuters) - Gold retreated on Monday from a more than
seven-year high, as stocks and oil surged on optimism
surrounding the trial of a potential COVID-19 vaccine.
    Spot gold        fell 0.7% to $1,728.72 per ounce by 1:35
p.m. EDT (1735 GMT), after hitting its highest since October
2012 at $1764.55. U.S. gold futures         settled 1.3% lower
at $1,734.40.
    "The reason why gold is kind of wobbling around positive and
negative change for the day right now is because everybody is
thinking 'risk-on' get into equities - as markets across the
board are up 3%," said Michael Matousek, head trader at U.S.
Global Investors.
    However, the trend "is still to the upside, there's still
plenty of reason to buy gold." 
     Wall Street surged and oil prices hit two-month highs after
drugmaker Moderna          said its experimental vaccine showed
promising results in an early-stage trial, with investors also
counting on more stimulus to rescue the U.S. economy from a
slump.                  
    U.S. Federal Reserve Chairman Jerome Powell, in broadcast
remarks on Sunday, outlined the likely need for three to six
more months of government financial help for firms and families.
            
    Gold, which tends to appreciate on expectations of lower
interest rates, has risen about 14% this year as central banks
rolled out a wave of rate cuts and other stimulus to limit
economic damage from the pandemic.             
    Reflecting investor appetite, holdings in the world's
largest gold-backed exchange-traded fund       rose to their
highest in over seven years.           
    Data published last week showed U.S. retail sales and
industrial production both plunged in April, with the
coronavirus crisis continuing to pummel the U.S. labour market.
            
    Japan too slipped into a recession in the first quarter.
            
    Markets also kept a wary eye on souring U.S.-China trade
relations.             
    Meanwhile, palladium        gained 5% to $1,996.72 an ounce
after soaring more than 9% earlier.
    "There's a lot of talk about auto manufacturers ramping up
production. Some traders are probably thinking they're going to
get ahead of the curve and start to buy palladium ahead of the
ramp-up," U.S. Global Investors' Matousek added.             
    Production of both platinum and palladium, used to reduce
vehicle emissions, and consumption by auto makers could fall by
around one-fifth in 2020 but the course of the virus is too
uncertain to give precise numbers, materials maker Johnson
Matthey          said.             
    Platinum        rose 2% to $814.07 an ounce, while silver
       jumped 2.7% to $17.06 - with both metals having hit a
two-month high earlier.

 (Reporting by Asha Sistla in Bengaluru; Editing by David
Gregorio and Steve Orlofsky)
  
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