May 13, 2020 / 3:14 PM / in 23 days

PRECIOUS-Gold gains as Fed's Powell signals more stimulus

 (Adds comment, updates prices)
    * Gold to hover in high-$1,600 to mid-$1,700 handle -Citi
    * Fed not looking at negative rates -Powell
    * SPDR gold holdings rise to seven-year highs
    * For an interactive graphic tracking the global coronavirus
spread, open tmsnrt.rs/3aIRuz7 in an external browser

    By Eileen Soreng
    May 13 (Reuters) - Gold rose on Wednesday after U.S. Federal
Reserve Chairman Jerome Powell pledged more stimulus measures,
if required, to ease the economic blow from the novel
coronavirus. 
    Powell said the United States could face an "extended
period" of weak growth and stagnant incomes and issued a call
for more fiscal spending.             
    Spot gold        gained 0.5% to $1,709.75 per ounce by 2
p.m. EDT (1800 GMT). Prices rose as much as 0.9% but eased after
Powell rejected the idea of using negative interest rates as a
stimulative tool. 
    U.S. gold futures        settled 0.6% higher at $1,716.40.
    "The Fed has a number of other options, so it's possible we
could see additional quantitative easing or continued policies
that would allow for a positive backdrop for the gold market,"
said Standard Chartered Bank analyst Suki Cooper.   
    "We expect interest rates globally to remain low, and
negative in some countries, and that continues to provide a
favourable backdrop for gold."
    The U.S. economy lost a staggering 20.5 million jobs in
April, as citizens were compelled to stay home and businesses
closed to curb the spread of the virus, which has infected 4.31
million people worldwide.             
    Central banks and governments have unleashed unprecedented
fiscal and monetary support for economies reeling from the
pandemic.             
    Gold tends to benefit from widespread stimulus measures as
it is considered a hedge against inflation and currency
debasement.
    The U.S. dollar index        was steady, while U.S. stocks
fell after Powell's remarks.                   
    "Even as we see the potential for gold market liquidation
and broad asset market drawdowns in the next 3-6 months, we
think gold trading will still mostly hover in a high-$1,600 to
mid-$1,700 handle." Citi Research said in a note.             
    Holdings of SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund, were at a seven-year high.          
    Elsewhere, palladium slipped 2.8% to $1,808.54 per ounce,
having earlier fallen to a one-week low of $1,761.80. 
    Demand for the autocatalyst has been squeezed by low car
sales globally, with rating agency Moody's projecting a 20% drop
in auto unit sales this year.             
    "While palladium has not escaped unscathed from the broad
risk reduction in terms of asset classes" the net impact of both
supply disruptions and demand shocks would still leave the
market in a deficit, but not to the magnitude expected at the
start of the year, Standard Chartered's Cooper said. 
    Silver        rose 0.3% to $15.45, and platinum       
climbed 0.8% to $759.29.

    
 (Reporting by Eileen Soreng and Arpan Varghese in Bengaluru;
Editing by David Gregorio)
  
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