Gold eases on profit-taking, but holds above $1,700 levelGold eases on profit-taking, but holds above $1,700 level
FILE PHOTO: 24 karat gold bars are seen at the United States West Point Mint facility in West Point, New York

By Shreyansi Singh

(Reuters) – Gold edged lower on Thursday as investors booked profits from sharp gains in the previous session, but prices held above the $1,700 an ounce level on the promise of more U.S. stimulus measures to ease the economic blow from the coronavirus crisis.

Spot gold fell 0.2% to $1,710.78 per ounce by 0520 GMT, after Wednesday’s more than 1.5% jump. U.S. gold futures were little changed at $1,738.90 per ounce.

“The market is probably more inclined to take profit on gold, simply because they are nearing the highs of the recent range,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.

“The U.S. kicked in more stimulus, which is really positive for gold because it increases fiscal deficits in the country. And with these low interest rates staying low, this is just a welcoming relief.”

Against key rivals, the dollar climbed to a more than two-week peak earlier in the session, making gold costlier for investors using other currencies.

Asian stock markets rose as the combination of a rebound in crude prices from historic lows and the promise of more U.S. government aid to cushion the coronavirus-ravaged economy helped calm nervous markets.

The U.S. House of Representatives expects to pass a nearly $500 billion coronavirus relief bill on Thursday but will put off any decision on changing its voting rules to avoid a potential partisan fight.

“In a nutshell, gold investors are more impressed with the bullish aspect of more fiscal spending than with the bearish impact of higher equities,” Innes said.

The pandemic has prompted governments and central banks around the world to unleash unprecedented fiscal and monetary support for economies battered by the virus.

The European Central Bank said on Wednesday it would let banks post collateral that was downgraded to junk during the outbreak to prevent a credit squeeze in the euro zone.

Gold tends to benefit from widespread stimulus measures from central banks since it is seen as a hedge against inflation and currency debasement.

Market participants also awaited U.S. initial weekly jobless claims data due at 1230 GMT.

Meanwhile, SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.9% to 1,042.46 tonnes on Wednesday.

Among other precious metals, palladium rose 0.6% to $1,949.18 an ounce.

Platinum climbed 0.4% to $760.35 per ounce, while silver gained 0.6% to $15.24 per ounce.

(Reporting by Shreyansi Singh in Bengaluru; Editing by Ramakrishnan M. and Subhranshu Sahu)