Gold weakens on firmer dollar and potential coronavirus drugGold weakens on firmer dollar and potential coronavirus drug
FILE PHOTO: Gold bars and coins are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich

By Eileen Soreng

(Reuters) – Gold prices fell on Wednesday, pressured by a stronger dollar and as optimism over a potential COVID-19 drug and economic recovery dented demand for bullion and supported riskier assets.

Spot gold was down 0.7% at $1,715.27 an ounce by 1026 GMT and U.S. gold futures fell 0.9% to $1,721.40.

Hopes for a COVID-19 treatment and the dollar’s gains after strong U.S. retail sales data and a rise in manufacturing output prompted profit-taking in the gold market, said Jigar Trivedi, commodities analyst at Mumbai broker Anand Rathi Shares.

The record increase in May U.S. retail sales reported on Tuesday supported views the U.S. recession might be drawing to an end, while upbeat trial results of a steroid treatment for COVID-19 patients helped European equities to their bigest gains in almost a month.

Against a basket of currencies, the dollar index was up 0.3%.

However, the market is more long than short overall, so investors are taking advantage of any rallies, trading in a range of $1,730-$1,735 on the upside and $1,710-$1,715 on the downside, said Afshin Nabavi, senior vice president at precious metals trader MKS SA.

Investors were also watching for developments in Beijing as it cancelled scores of domestic flights on Wednesday, ramping up attempts to contain a renewed outbreak of the coronavirus.

“If governments confirm a second wave of coronavirus, then $1,740 is very likely (for gold),” Anand Rathi’s Trivedi said.

Elsewhere, palladium rose 0.2% to $1,934.81 an ounce, while platinum lost 0.9% to $813.31.

Silver was up 0.3% at $17.44.

(Reporting by Eileen Soreng in Bengaluru; Editing by David Goodman)