PRECIOUS-Gold falls as fears over new virus variant boost dollar

  • Reuters
  • Commodities News
PRECIOUS-Gold falls as fears over new virus variant boost dollar
Credit: © Reuters.

(Updates prices)

* U.S. economy grew at a record pace in Q3- data

* Possible transmission of new variant to U.S. could boost gold - analyst

* Interactive graphic tracking global spread of coronavirus:

By Aaron Saldanha

Dec 22 (Reuters) - Gold prices fell on Tuesday as the dollar benefited from safe-haven buying driven by fears over a new coronavirus variant in the United Kingdom.

Spot gold XAU= fell 0.7% to $1,862.55 per ounce by 1:57 p.m. EST (1857 GMT), while U.S. gold futures GCv1 settled down 0.7% at $1,870.30.

"Dollar strength has capped some of gold's upward momentum," Standard Chartered (LON: STAN ) Analyst Suki Cooper said.

Making gold more expensive for holders of other currencies, the dollar gained as investors trimmed exposure to riskier currencies like that of the United Kingdom, which is facing a new variant of the coronavirus. USD/ data on Tuesday showed the U.S. economy grew at a record pace in the third quarter. had hit a six-week high of $1,906.46 on Monday, mainly supported by U.S. Congress's approval of a $892 billion coronavirus aid package to support the economy. risks are skewed to the upside for gold as we enter 2021, given our expectations for the dollar to weaken and monetary policy to remain accommodative, but year-end profit-taking may cap the gains in the near term." Cooper added.

Gold, considered a hedge against inflation, has still risen about 23% this year amid the massive stimulus unleashed globally.

"If the new strain does make its way into the U.S. and does reinfect people, that could really cause some additional economic damage and that could be kind of the next tailwind for gold," said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

In other metals, silver XAG= fell 3.7% to $25.19 an ounce, distancing itself from a more than three-month peak hit in the previous session.

Platinum XPT= was down 1% at $999.41, while palladium XPD= rose 0.4% to $2,316.49.

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