March 18, 2020
Gold rises as U.S. stimulus to combat virus stems rush for cash
(Reuters) - Gold prices inched higher on Wednesday as additional stimulus from the United States eased some concerns over the economic impact of the coronavirus and halted a trend of selling precious metals for cash, although a strong dollar capped gains.
Spot gold rose 0.1% to $1,529.01 per ounce by 0513 GMT, having risen about 1% earlier in the session. U.S. gold futures gained 0.3% to $1,529.40 an ounce.
IG Markets analyst Kyle Rodda said the steps taken by the U.S. central bank to support liquidity are, in turn, helping the metal.
"That has boosted sentiment a little and we saw the unwinding of some of that behaviour, which is 'sell gold among everything else to find cash,'" he said.
The U.S. Federal Reserve said on Tuesday it would reinstate a funding facility used during the 2008 financial crisis to get credit directly to businesses and households as fears over a liquidity crunch due to the virus have grown in recent days.
Meanwhile, the Trump administration pursued a $1 trillion stimulus package that could deliver $1,000 checks to Americans within two weeks to cushion the economy.
"(However,) the overall strong position of the dollar has limited further gains for gold," said Michael McCarthy, chief strategist at CMC Markets.
The U.S. dollar hovered near a four-week high scaled on Tuesday against key rivals, making gold costlier for investors holding other currencies.
Among countries and central banks providing stimulus to their virus-hit economies, Britain launched a new lending scheme to provide short-term bridging finance for large businesses hurt by the epidemic, which will be run and funded by the Bank of England.
Underscoring the economic strain from the virus, a survey showed that the mood among German investors slumped in March to levels last seen at the beginning of the world financial crisis
in 2008 due to alarm at the impact on Europe's largest economy.
Among other precious metals, palladium gained 0.1% to $1,644.50 per ounce, while platinum rose 1.4% to $670.68.
Silver climbed 1.9% to $12.83 after eight straight sessions of falls.