May 20, 2020 / 3:44 AM / 11 days ago

PRECIOUS-Gold gains as bleak economic outlook underpins safe-haven demand

 (Updates prices)
    * Stocks rally runs out of steam on vaccine doubts
    * U.S. homebuilding dropped by the most on record in April 
    * FOMC minutes due at 1800 GMT
    * For an interactive graphic tracking the global coronavirus
spread, open tmsnrt.rs/3aIRuz7 in an external browser

    By Harshith Aranya
    May 20 (Reuters) - Gold firmed on Wednesday buoyed by rising
demand for safe-haven investments, as the extent of damage from
the coronavirus became more apparent following bleak data from
major economies and optimism about a potential vaccine fizzled
out.
    Spot gold        was up 0.2% at $1,747.82 per ounce by 0808
GMT. U.S. gold futures         rose 0.4% to $1,752.40.
    "The so called 'vaccine hope' rally in equities has
weakened. Gold is back in focus with bad economic releases...
trade relations can take an ugly turn at any moment," said Jigar
Trivedi, commodities analyst at Anand Rathi Shares and Stock
Brokers in Mumbai.
    The optimism from early data for a vaccine faltered after a
medical news website reported it was insufficient, causing U.S.
equities to fall and Asian stocks to be flat after rallying
earlier this week.                         
    U.S. homebuilding dropped by the most on record in April and
permits for future construction tumbled, leading to fears the
pandemic would lead to the deepest economic contraction in the
second quarter since the Great Depression.             
    In Japan, business confidence collapsed in May, hitting
decade lows as firms braced for a protracted period of economic
weakness, the Reuters Tankan survey showed.             
    Markets now await the Federal Open Market Committee's April
28-29 policy meeting minutes at 1800 GMT.              
    In testimony before the U.S. Senate Banking Committee,
Federal Reserve Chairman Jerome Powell said the Fed was looking
at extending access to the credit facilities to additional
borrowers, including states with smaller populations.
            
    "What the Fed does in the next few months will be pretty
important, and certainly Powell did indicate that the rates
would remain near zero for foreseeable future," ANZ analyst
Daniel Hynes said.           
    Lower interest rates benefit the non-interest bearing gold. 
    Elsewhere, palladium        fell 0.5% to $2,049.94 per ounce
and silver        slipped 0.2% to $17.37, while platinum       
rose 0.3% to $835.21.

 (Reporting by Harshith Aranya and K. Sathya Narayanan in
Bengaluru, Editing by Sherry Jacob-Phillips and Rashmi Aich)
  
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