Gold fell on Wednesday as optimism around the easing of coronavirus-led lockdowns and hopes of a potential treatment drug propped up risk assets.
“You just have the risk-on sentiment from U.S. equity markets… I think there’s some profit taking in gold right now.”
Spot gold fell 0.6% to $1,701.10 per ounce at 2:19 p.m. EDT, having fallen for three previous sessions. U.S. gold futures settled down 0.3% at $1,716.60.
“You just have the risk-on sentiment from U.S. equity markets… I think there’s some profit taking in gold right now and a lot of people are getting repositioned for the next flight up in gold,” said Michael Matousek, head trader at U.S. Global Investors.
Wall Street jumped following an encouraging update from Gilead Sciences on a potential COVID-19 treatment and upbeat earnings.
Sentiment also improved as parts of the United States, Europe and Australia gradually eased restrictions. New Zealand this week allowed some businesses to reopen.
The Federal Reserve, which has pumped trillions in emergency funding into U.S. financial markets, reiterated its promise to do whatever it takes to support the economy.
The U.S. central bank also signaled it will keep interest rates near zero until certain aspects of the economy like unemployment stage a healthy comeback.
A Commerce Department report earlier in the day showed advanced first quarter gross domestic product fell at a 4.8% annual rate as the coronavirus-induced shutdowns at the end of the quarter shoved the longest U.S. economic expansion into reverse.
“The stars seem to be aligned for gold prices. The improvement in investor sentiment, aggressive monetary policy easing, ultra-low interest rates and fiscal stimulus have all supported gold prices,” ABN AMRO said in a note.
Safe-haven gold tends to benefit from widespread stimulus measures as it is often seen as a hedge against inflation and currency debasement.
Elsewhere, palladium gained 1.3% to $1,872 per ounce, and platinum rose 1% to $778. Silver rose 0.2% to $15.19.
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