Gold price steadies near highest since November 2011 as virus cases mount

Gold steadied near a more than eight-year high on Wednesday, as worries over surging COVID-19 cases and hopes of more stimulus measures from the U.S. Federal Reserve lifted demand for the safe-haven metal. Spot gold was little changed at $1,792.79 per ounce by 0241 GMT, after hitting its highest since November 2011 at $1,796.93 on Tuesday, just a few dollars away from the key $1,800 level. U.S. gold futures eased 0.2% to $1,805.70.

"The main focus continues to be on the U.S. If the curve continues to steepen and the virus unabated, we are going to break $1,800 just for the fact that the Fed will have to be forced to add more stimulus," said Stephen Innes, chief market strategist at financial services firm AxiCorp.

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The U.S. coronavirus outbreak crossed a grim new milestone of over 3 million confirmed cases as more states reported record numbers of new infections.

Compounding economic concerns, the European Commission on Tuesday forecast the euro zone would drop deeper into recession this year and rebound less steeply in 2021 than previously thought.

"The health, financial and economic uncertainties generated by the COVID-19 pandemic and its aftermath are likely to continue to support gold`s rally well into 2021, but at a reduced level," HSBC analysts said in a note.

Fed officials expressed concern that the surge in COVID-19 cases threatens to pinch consumer spending and job gains. One Fed policymaker pledged more support ahead from the U.S. central bank.

Gold tends to benefit from widespread stimulus measures from central banks because it is widely viewed as a hedge against inflation and currency debasement.
Indicative of sentiment, holdings of SPDR Gold Trust rose 0.7% on Tuesday.

Weighing on gold, the dollar index rose 0.1%.

Palladium gained 0.3% to $1,921.69 per ounce and platinum was steady at $835.45, while silver lost 0.1% to $18.28.