Gold steady as virus cases mount; firm dollar caps gainsGold steady as virus cases mount; firm dollar caps gains
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, while hopes for a potential COVID-19 drug and a stronger U.S. dollar limited bullion’s advance.

Spot gold was flat at $1,727.72 per ounce by 0533 GMT, holding a tight $6 narrow range. U.S. gold futures were mostly unchanged at $1,736.30.

“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.

However, the dollar rose 0.1% against its rivals, making gold expensive for holders of other currencies.

Meanwhile, 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 the safe-haven, which 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 North Korea rejected a South Korea offer to send special envoys and vowed to send back troops to the border.

“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,” said Stephen Innes, chief market strategist at financial services firm AxiCorp, in a note.

Elsewhere, palladium dropped 0.8% to $1,916.91 per ounce, silver eased 0.1% to $17.39 and platinum lost 0.5% to $816.65.

(Reporting by Brijesh Patel in Bengaluru; editing by Uttaresh.V and Krishna Chandra Eluri)