Gold steady as firm dollar offsets rise in virus casesGold steady as firm dollar offsets rise in virus cases
FILE PHOTO: Gold bars and coins are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich

By Brijesh Patel

(Reuters) – Gold prices held steady on Wednesday, supported by concerns stemming from a surge in coronavirus infections in Beijing but with hopes for a potential COVID-19 drug and a stronger U.S. dollar limiting their advance.

Spot gold was flat at $1,727.26 per ounce by 0717 GMT, holding a tight $6 narrow range. U.S. gold futures were mostly unchanged at $1,736.60.

“The attention remains elsewhere, mostly equity markets. However, COVID-19 nerves as Beijing shutdowns extend should offer support on any dips,” said Jeffrey Halley, senior market analyst at OANDA.

Beijing officials reported several new COVID-19 cases for the sixth consecutive day, while new infections hit record highs in six U.S. states on Tuesday.

Offsetting upwards pressure on gold, the dollar rose 0.1% against its rivals, making the metal more expensive for holders of other currencies.

A record increase in U.S. retail sales in May supported views the U.S. recession might be drawing to an end, with upbeat trial results for a COVID-19 treatment further aiding investor sentiment.

Geopolitical tensions and additional stimulus measures from global central banks also offered some support to bullion, which is often used as a safe store of value during times of political and financial uncertainty.

India reported 20 of its soldiers had been killed in clashes with Chinese troops at a disputed border site, while tensions between North and South Korea simmered after North Korea blew up a joint liaison office set up as part of a 2018 peace agreement.

“On the one hand, we have geopolitical flashpoints igniting all over the map. On the other, the U.S. dollar is more robust and competing for those same safe-haven flows,” AxiCorp’s chief market strategist Stephen Innes said.

Elsewhere, palladium dropped 0.5% to $1,921.50 per ounce, platinum lost 0.5% to $816.64, while silver was steady at $17.41.

(Reporting by Brijesh Patel in Bengaluru; Editing by Uttaresh.V, Krishna Chandra Eluri and Jan Harvey)