PRECIOUS Gold extends rally on virus jitters, weaker U.S. yields

Gold bars and coins are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, August 14, 2019. REUTERS/Michael Dalder/File Photo
  • U.S. monthly retail sales data due at 1230 GMT
  • Gold, silver hit more than one-week peak
  • European stocks at one-week low on virus worries
  • U.S. 10-year bond yields at near 2-week low

Aug 17 (Reuters) - Gold extended its winning streak to a fifth session on Tuesday, supported by a drop in U.S. bond yields and worries that a spike in COVID-19 Delta variant cases could hinder a recovery in the global economy.

Spot gold was up 0.2% at $1,790.81 per ounce by 1205 GMT, after earlier hitting its highest since Aug. 6.

U.S. gold futures rose 0.2% to $1,792.90.

"Lower U.S. yields and the fact that equity markets are slightly softer on the back of the weakness in Asia markets is helping gold," said Michael Hewson, chief market analyst at CMC Markets UK.

"Some governments are slightly over reacting to COVID-19 cases, raising concerns that there could be another economic slowdown," Hewson said, adding that it meant central bank policy tightening might not happen.

Benchmark 10-year Treasury yields dipped to a near two-week low, translating into reduced opportunity cost of holding non-interest bearing gold.

A surge in COVID-19 cases in Asia and elsewhere sapped risk sentiment in wider financial markets.

Concerns over China's regulations for its once-freewheeling internet sector and turmoil in Afghanistan also kept investors on edge. read more

Gold is considered a safe store of value during times of political and financial uncertainty.

"Afghan events do not usually move gold, but the swift and apparently complete Taliban victory may indirectly support 'safe haven' assets such as bullion, even if only modestly," HSBC said in a note.

"The impact on gold may be greater than at first imagined."

Focus now shifts to the U.S. retail sales data due at 1230 GMT as well as minutes of the Federal Reserve's July meeting on Wednesday, which will be scanned for clarity on the tapering timeline.

Elsewhere, silver was steady at $23.81 per ounce, having hit its highest since Aug. 9 at $23.95.

Platinum gained 0.2% to $1,023.87, while palladium slipped 0.9% to $2,582.84.

Reporting by Brijesh Patel in Bengaluru; Editing by Anil D'Silva, Kirsten Donovan

Our Standards: The Thomson Reuters Trust Principles.