PRECIOUS-Gold dips as vaccine hopes offset softer dollar, virus woes

  • Reuters
  • Stock Market News
PRECIOUS-Gold dips as vaccine hopes offset softer dollar, virus woes
Credit: © Reuters.

* Fresh restrictions in several U.S. states after virus surge

* Asian shares rally, dollar subdued

* Interactive graphic tracking global spread of coronavirus: https://tmsnrt.rs/3mvcUoa (Updates prices)

By Eileen Soreng

Nov 17 (Reuters) - Gold prices eased on Tuesday as market optimism over a second possible COVID-19 vaccine countered a subdued dollar and concerns over rising coronavirus cases globally.

Spot gold XAU= eased 0.1% to $1,886.83 per ounce by 0744 GMT, while U.S. gold futures GCv1 were down 0.1% to $1,885.40.

"The optimism over a COVID-19 vaccine is dampening demand for the precious metal," said FXTM market analyst Han Tan.

While a Democrat-driven agenda in the U.S. Senate may result in larger fiscal stimulus and thereby boost gold, a vaccine-fuelled U.S. economic recovery may re-energize the dollar and push gold to sub-$1,850 levels, Tan added.

Propping up bullion, the dollar index .DXY was down 0.1%. USD/ US/

Gold dropped as much as 1.3% on Monday after Moderna MRNA.O said its vaccine was 94.5% effective in preventing COVID-19 based on interim data from a late-stage trial, becoming the second U.S. drugmaker after Pfizer (NYSE: PFE ) PFE.N to report results exceeding expectations. Asian shares pushed into record territory on vaccine optimism. MKTS/GLOB

However, the monetary environment is still very accommodative and may stay at current levels into spring 2021, providing near-term support for gold, said Margaret Yang, strategist at DailyFX.

Gold, considered a hedge against inflation and currency debasement, has gained over 24% this year, mainly benefiting from global stimulus to cushion the effect of the pandemic.

President-elect Joe Biden called on Congress to pass a new coronavirus relief package, while new restrictions were placed in several U.S. states to curb surging cases. Reserve Vice Chair Richard Clarida on Monday acknowledged the new vaccine as a positive for economic recovery and said that the central bank would apply an expansive view of the labour market before deciding on any rate hikes. XAG= fell 0.7% to $24.57 per ounce. Platinum XPT= slipped 0.7% to $918.76, while palladium XPD= eased 0.4% to $2,322.76.

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