(Reuters) –Gold prices rose on Thursday backed by a weaker dollar ahead of a widely expected Brexit trade deal, with uncertainties around a new variant of the coronavirus overshadowing vaccine optimism.
Spot gold was up 0.1% higher at $1,873.96 per ounce by 1233 GMT. U.S. gold futures were little changed at $1,878.60.
“A combination of a weaker dollar, negative real rates and low yields along with uncertainties around the new strain of coronavirus is helping gold at the moment,” said UBS analyst Giovanni Staunovo.
Concerns about the spread of a more infectious coronavirus variant which has led to a tightening of restrictions in Britain lifted the safe-haven appeal of the precious metal.
Elsewhere, Britain and the European Union were on the verge of striking a post-Brexit trade agreement, supporting sterling and weighing on the dollar.[USD/]
“However, broadly, the outlook for gold is not bullish… The recent vaccine optimism has smudged gold’s appeal,” said Hareesh V, head of commodity research at Geojit Financial Services, adding that neither did he expect gold to crash.
“Economic uncertainties still exist and the metal will keep drawing support from ultra-low interest rates.”
Data on Wednesday showed the number of Americans filing first-time claims for unemployment benefits remained elevated but posted a fall last week.
Meanwhile, U.S. President Donald Trump’s threat to not sign a nearly $900 billion stimulus bill was largely brushed off by market participants.
“Investors are pretty optimistic about fiscal and monetary supports from governments around the globe, even though a vaccine reduces the might of the virus. The economy needs it,” UBS’ Staunovo said.
Bullion, up around 24% this year, is set for its biggest annual gain since 2010, with the unprecedented stimulus pumped in by major governments to offset the economic blow of the coronavirus crisis expected to lift inflation rates.
Silver was up 0.7% at $25.71. Platinum gained 0.3% to $1,017.62 and palladium rose 0.4% to $2,332.55.
Reporting by Diptendu Lahiri in BengaluruEditing by Kirsten Donovan and Mark Heinrich