Gold rises as impact of virus surge offsets taper bets

Platinum gained 0.1% to $1,003.98 and palladium was steady at $2,642.87

A 500 gram gold bar is seen at the Kazakhstan's National Bank vault in Almaty, Kazakhstan September 15, 2017.

A 500 gram gold bar is seen at the Kazakhstan's National Bank vault in Almaty, Kazakhstan September 15, 2017.

REUTERS/Mariya Gordeyeva

Gold rose on Wednesday as concerns over the economic impact of the Delta coronavirus variant spurred some safe haven buying, though gains were capped by bets on early tapering by the U.S. Federal Reserve and a firm dollar.

Spot gold rose 0.5% to $1,737.95 per ounce by 1147 GMT, recovering some ground after four straight sessions of declines. U.S. gold futures gained 0.4% to $1,738.30.

While there are signs of stabilisation in the gold market, tensions surrounding the economic impact of new virus infections are providing some support, Quantitative Commodity Research Analyst Peter Fertig said.

A strong U.S. jobs report last week coupled with comments from Fed officials suggesting an earlier-than expected tapering of economic support has hammered precious metals over the last couple of sessions, keeping gold well below the pivotal $1,800 level. 

The dollar index also held near a three-week high, reducing gold's allure among other currency holders, while U.S. Treasury yields hit their highest levels since mid-July.

"The rebound in yields is also expected to run further as the tapering talk grows louder, which would only strengthen the headwinds besetting gold," said Han Tan, chief market analyst at Exinity.

Higher yields reduce the opportunity cost of holding non-interest bearing gold.

The focus is on the monthly U.S. personal consumption report at 1230 GMT for further clues on the tapering timeline. 

Elsewhere, platinum rose 1.5% to $1,009.77 per ounce, while palladium  was up 0.5% at $2,653.65.

Commerzbank analysts said that if official figures reaffirm private sector data showing China's vehicle sales slid for a third straight month, that could have a negative impact on palladium demand.*:nL1N2PI0DK

Platinum and palladium are used as catalysts in automobiles exhaust systems to curb emissions.

Silver rose 0.6% to $23.45 an ounce.

(Reporting by Arundhati Sarkar in Bengaluru, additional reporting by Nakul Iyer; Editing by Jane Merriman and Barbara Lewis) ((;; +1 646 223 8780 Ext: 2776))

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