PRECIOUS Gold rebounds on some safe-haven interest as U.S. yields ease

Gold bars and coins are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, August 14, 2019. REUTERS/Michael Dalder/File Photo

Summary Fed minutes due on Wednesday

Geopolitics a focus as Taliban seize Afghanistan

Aug 16 (Reuters) – Gold extended its recovery on Monday, buoyed by a pullback in U.S. Treasury yields and some safe-haven buying spurred by COVID-19-related concerns, with investors looking for more direction from the Federal Reserve on monetary policy.

Spot gold rose 0.4% to $1,786.29 per ounce by 1:40 pm EDT (1740 GMT). U.S. gold futures settled up 0.7% at $1,789.8.

Prices jumped more than 1% on Friday after data showed U.S. consumer sentiment plummeted in August, helping the metal recover from steep declines in the earlier part of last week after bets for tapering got a fillip from recent strong labor data. read more

While COVID-19-related safe-haven buying has been seen in Europe, the U.S. market has not seen the same level of interest, said TD Securities commodity strategist Daniel Ghali, adding a rising trend of higher gold purchases from central banks are providing underlying support to bullion.

“We’re seeing an aftermath of a significant positioning squeeze in gold” with the large amount of short positions accumulated as Fed taper talks grew louder now being covered, Ghali added.

Investors now await direction from Fed Chairman Jerome Powell and the central bank’s minutes from its July policy meeting.

U.S. Treasury yields were pinned near more than a week low, reducing the opportunity cost of holding the non-interest bearing bullion.

Markets are also keeping a close watch on turmoil in Afghanistan. read more

“The quick escalation of events in Afghanistan should not really impact the gold market,” said Nicky Shiels, group head of metals strategy at MKS PAMP Group.

“There’s usually an asymmetric response in prices to geopolitical events; it responds more favorably as a hedge when the U.S. enters into new wars, not the withdrawal of U.S. troops and presence.”

In other metals, silver rose 0.3% to $23.80 per ounce, platinum fell 0.3% to $1,023.52, and palladium slid 1.3% to $2,614.66.

Reporting by Arundhati Sarkar and Arpan Varghese in Bengaluru; additional reporting by Swati Verma; editing by Jonathan Oatis

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