By Eileen Soreng
(Reuters) – Gold fell 1% on Monday as the dollar lingered near a more than one-week high, but the metal held comfortably above $1,700 an ounce as fears of a second wave of the coronavirus pandemic dampened risk sentiment.
Spot gold was 1% lower at $1,712.00 per ounce by 1211 GMT. U.S. gold futures slipped 1.4% to $1,713.70.
“The greenback seems to be back in fashion amid fears of a second wave of coronavirus destabilizing global growth and stability,” said FXTM analyst Lukman Otunuga.
“Gold remains in a very wide range with support at $1,670 and resistance at $1,747. A breakout above this…could inspire an incline towards $1,765.”
Against a basket of currencies, the dollar steadied, while equities were pressured by fears of a second wave of COVID-19 infections.
Beijing has recorded dozens of new cases in recent days, while new infections and hospitalisations in record numbers swept through more U.S. states.
“We are in a bit of a holding pattern waiting to see whether or not we do get a confirmed second wave, and if economies start to shut again, we could see gold go higher” said Michael Hewson, chief market analyst at CMC Markets UK.
Gold prices jumped 2.6% last week, their strongest performance since April 10, as worries of a new wave picked up.
Bullion also faces deflationary pressures in the short-term, said Saxo Bank analyst Ole Hansen.
“Inflation is collapsing with the drop in consumer demand and the slow reopening of economies. So that’s removing the demand for gold.”
SPDR Gold Trust holdings rose 0.1% on Friday, while speculators cut their bullish positions in COMEX gold and silver contracts in the week to June 9.
Palladium was down 0.8% at $1,903.17 per ounce, platinum eased 0.1% to $804.40 after touching a one-month low of $780.05, and silver fell 1.8% to $17.13, having earlier hit a near three-week low of $17.02.
(Reporting by Eileen Soreng in Bengaluru; Editing by Mark Potter, Kirsten Donovan)