Gold edges higher as global recession fears persist

Wednesday, 20 May 2020 00:41 - - {{hitsCtrl.values.hits}}

Reuters: Gold prices rose yesterday, supported by fears of a global recession and a wave of central bank stimulus measures, while an uptick in risk appetite after a positive report on a potential COVID-19 vaccine limited bullion’s advance.

Spot gold was up 0.1% at $ 1,733.06 an ounce by 1244 GMT. US gold futures were steady at $ 1,733.50. Gold had slipped from a multi-year peak on Monday after drugmaker Moderna said its COVID-19 experimental vaccine showed promising results in a preliminary trial, lifting US equities and oil prices.

However, price support has come in the form of massive stimulus measures from central banks in an effort to limit the economic damage caused by the virus. Gold tends to benefit from such stimulus because the metal is widely viewed as a hedge against inflation and currency debasement.

In the latest on damage control, France and Germany proposed a 500 billion euro ($ 543 billion) recovery fund that would offer grants to European Union regions and sectors hit hardest by the virus.

Federal Reserve Chairman Jerome Powell, who at the weekend said that a US economic recovery could stretch deep into next year, is due to speak before the Senate Banking Committee yesterday to discuss economic rescue efforts.

Raising fears of a further deterioration in China-US relations, Nasdaq Inc. NDAQ.O is set to unveil new restrictions on initial public offerings, which will make it more difficult for some Chinese companies to list there, sources said.