Gold Rises but Coronavirus Perils Linger

Gold futures crept up 0.19% to $1,791.15 by 12:30 AM ET (4:30 AM GMT).

Jeffrey Halley, the senior market analyst for the Asia Pacific at OANDA, told Reuters that the elephant in the room is this coronavirus Delta variant and whether it does substantially affect the global improvement. In that situation, gold is expected to find more haven buying.

In the Asia Pacific, the Reserve Bank of New Zealand left its interest rate fixed at 0.25% as it gave down its policy settlement earlier in the day. New Zealand’s first local coronavirus infection drove the country into lockdown and put the brakes on the central bank’s plan to increase interest rates in six months.

In other central bank news, the U.S. Federal Reserve will publish the minutes from its July meeting later in the day. Investors will be seeking guidance on the Fed’s policies for asset tapering and interest rate hikes in the minutes.

Imminent asset tapering ahead

Halley added that these Fed minutes will determine gold’s fate and whether they indicate imminent asset tapering in September. If that leads to a more expensive dollar and U.S. yields, gold will likely drop back under $1,700.

Minneapolis Fed President Neel Kashkari said it could be “reasonable” to begin asset tapering later in 2021. However, this depends on the development of the labor market’s recovery. Nevertheless, Fed Chairman Jerome Powell spoke on the same day that it continues unclear whether the recent coronavirus Delta variant outbreaks will have a remarkable influence on the economy.

In other precious metals, silver increased 0.7%, and platinum surged 1.3%. Palladium developed 1.2% following beating a two-month low on Tuesday.