Gold firmed on Wednesday after retreating in previous sessions, with a weaker dollar helping offset a shift to equities and other riskier assets on vaccine-led economic recovery hopes.
Spot gold rose 0.2% to $1,811.00 per ounce by 0914 GMT. On Tuesday, it hit its lowest since July 17 at $1,800.01.
U.S. gold futures also rose 0.2% to $1,808.80 per ounce.
“It’s clearly bargain hunting at present. Prices have fallen over $150 in the past two weeks and investors are grabbing this opportunity to take positions,” said Robin Bhar, an independent analyst.
The dollar index eased 0.2%, making bullion cheaper to other currency holders.
Sunilkumar Katke, head of currencies and commodities at Axis Securities, said the weaker dollar was a good opportunity for investors who missed buying gold in March. “The strategy is ‘sale on rise’ in the very short term,” he said.
Analysts do not expect an immediate recovery in gold with equities powering to record highs, boosted by optimism about a COVID-19 vaccine and a smooth power transition in Washington.
But StoneX analyst Rhona O’Connell said consolidation in the gold price was likely as “a vaccine is not a cure and the acceleration in rates of infection is a major worry, not just humanitarian but also economic. Negative interest rates will persist.”
Lower interest rates reduce the opportunity cost of holding non-yielding gold, which has gained more than 18% this year given its status as a hedge against likely inflation spurred by the massive stimulus unleashed globally.
Prices should rise again as “more evidence of inflation emerges,” Goldman Sachs said.
Investors await minutes from the U.S. Federal Reserve’s last meeting due at 1900 GMT.
Silver was up 0.5% to $23.37 an ounce. Platinum fell 0.3%, to $958.67 per ounce and palladium was also down 0.8% to $2,329.50.
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