Gold slipped further on Wednesday as economies across the world try to return to normalcy after a long period of lockdown, drawing investors towards riskier assets — even as the number of covid-19 cases continues to spike.
A stronger US dollar and expectations that gold supply will grow once bullion refineries resume operations also exerted downward pressure on the precious metal’s price.
Spot gold declined nearly 1.5% to $1,683.40 an ounce by 12:30 p.m. EST.
Gold futures for June delivery also fell by 1.4% to $1,684.60 on the Comex in New York, narrowing its lead over London spot prices just as two of the world’s biggest gold refiners said they are restoring nearly all operations.
“It’s probably a combination of more supply coming into the Comex, and probably a little bit less interest as risk appetite is growing and the US dollar rallies,” said Bart Melek, head of commodity strategies at TD Securities.
Six weeks of closures disrupted global gold supply and caused prices to diverge dramatically in key trading hubs. In March, prices in New York and London were driven further apart than they have been in decades, with the difference rising to as much as $70 an ounce.
The price of the yellow metal has risen about 11% so far this year — at one point reaching a seven-year high — while the global economy slumped during the pandemic.
Gold has also benefitted from widespread stimulus packages from the world’s biggest central banks, as it is often considered a hedge against inflation and currency debasement.