Gold gains as Hong Kong unrest stirs risk aversion

Thursday,   28-May-2020   08:58 AM (IST)

Gold prices rose on Thursday as tensions between the United States and China over a Hong Kong security law escalated, while fresh stimulus measures by several economies to mitigate the coronavirus fallout also lent support. Spot gold was up 0.2% at $1,711.35 per ounce, as of 1250 GMT, after touching a two-week low on Wednesday. U.S. gold futures fell 0.2% to $1,723.60. U.S. Secretary of State Mike Pompeo said Hong Kong no longer qualifies for its special status under the U.S. law, dealing a blow to its status as a financial hub. U.S. President Donald Trump has a long list of possible responses to China's plans to impose a national security law on Hong Kong, including visa and economic sanctions, said David Stilwell, assistant Secretary of State for East Asia. The European Union unveiled a 750 billion euro ($826.13 billion) plan on Wednesday to prop up economies, lifting the demand for safe-haven assets such as gold. Stimulus measures to limit the economic damage have supported gold, which is often considered a hedge against inflation and currency debasement. Japan approved a fresh $1.1 trillion stimulus package; while sources said India may need to pump nearly $20 billon into its state banks. A Federal Reserve report on Wednesday implied that U.S. businesses continued to be hammered into the middle of May. SPDR Gold Trust holdings, the world's largest gold-backed exchange-traded fund, rose 0.2% to 1,119.05 tonnes on Wednesday. Palladium rose 0.2% to $1,938.76 per ounce and platinum gained 1.9% to $834.19, while silver fell 0.4% to $17.24.