Economic news

Gold Gains as Focus Shifts to Fed Meeting

* Asia stocks hit 2021 lows

* Focus turns to Fed meeting

* Dollar index down 0.2% against its rivals 

July 26 (Reuters) - Gold prices rose on Monday as a softer dollar and concerns that rising coronavirus cases could stall economic recovery lifted demand for the safe-haven metal, while investors awaited the Federal Reserve meeting for policy cues.

Spot gold was up 0.4% at $1,808.16 per ounce by 1038 GMT, while U.S. gold futures rose 0.4% to $1,808.50 per ounce.

Gold is drawing support from the risk-off sentiment, as equity markets are falling and the dollar is also slightly weaker, UBS analyst Giovanni Staunovo said.

“Because all other assets are falling, you have (gold) as a hedge, and then as soon as this direction changes you liquidate,” Staunovo said, adding the metal is being seen as a short-term trade rather than a good opportunity to hold longer term.

Asian shares skidded to their lows for this year as concerns over tightening regulations upended Chinese equities.

The U.S. dollar slipped 0.2% against a basket of currencies, while benchmark 10-year Treasury yields pulled back, reducing the opportunity cost of holding non-interest bearing gold.

Coronavirus cases continued to rise over the weekend with some countries posting record daily increases.

Investor focus now shifts to the U.S. central bank’s meeting on Tuesday and Wednesday for more clarity on monetary policy.

Last week the European Central Bank pledged to keep interest rates at record lows for some time and warned that the rapidly spreading Delta variant poses a risk to the euro zone’s recovery.

“Any dovish news coming from (Federal Reserve chief) Jerome Powell and his team would be seen as positive for the bullion price,” Carlo Alberto De Casa, market analyst at Kinesis, said.

In other metals, silver gained 0.9% to $25.38 per ounce, palladium rose 1.1% to $2,702.46 and platinum gained 0.3% to $1,065.

(Reporting by Arundhati Sarkar and Brijesh Patel in Bengaluru Editing by David Evans and David Holmes)

Source: Reuters

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