(Updates prices)
* Silver down more than 3%
* China's economy registers first quarterly contraction
since 1992
* Interactive graphic tracking the global spread: open https://tmsnrt.rs/3aIRuz7
in an external browser
By Brijesh Patel
April 17 (Reuters) - Gold prices fell 2% on Friday as
investors opted for riskier assets following news of U.S.
President Donald Trump's plans to restart the U.S. economy and
promising early data related to a potential COVID-19 treatment.
Spot gold XAU= was down 1.7% at $1,688.93 an ounce by 1203
GMT. Earlier this week, it scaled a seven-year peak on concerns
over the worst recession in decades.
"The latest sentiment drift to the positive side and
narrative that a plan to return to normal is now afoot are
seeing spot gold trading back through $1,700-an-ounce technical
support," Saxo Bank analyst Ole Hansen said.
Global financial markets drew comfort from Trump's plans for
a gradual reopening of the U.S. economy, overshadowing anxiety
over data showing China that suffered its worst quarterly
economic contraction on record. Also lifting risk sentiment, a report detailed encouraging
data from trials of U.S. drugmaker Gilead Sciences Inc's
experimental drug remdesivir in severe COVID-19 patients.
Further weighing on gold, the dollar index .DXY gained
0.2%, holding near a one-week high against a basket of major
currencies. USD/
"Investors are celebrating, perhaps a little too early, the
apparent effectiveness of the Gilead drug in treating
coronavirus and speeding up patients' recovery from it,"
ActivTrades chief analyst Carlo Alberto De Casa said in a note.
"In this scenario, they are seeing less need to increase the
percentage of gold in their portfolio and are moving back to
some more risk-on assets."
The pandemic, which has infected more than 2 million people
globally and killed 143,744, has battered economies and prompted
central banks to roll out a wave of monetary support measures.
"While policymakers are eager to limit the economic damage,
the reopening of their respective countries could be upended by
a swift resurgence of the coronavirus," FXTM analysts said in a
note.
Gold tends to benefit from widespread stimulus measures from
central banks because it is widely viewed as a hedge against
inflation and currency debasement.
Lower interest rates also cut the opportunity cost of
holding non-yielding bullion.
U.S. gold futures GCcv1 dropped 1.4% to $1,707, narrowing
their lead over London spot prices, signalling hopes for an
improvement in strained supply chain logistics that have
hampered bullion shipments to the United States to meet contract
requirements. CFTC/
Of the other precious metals, palladium XPD= rose 1% to
$2,175.29 an ounce, silver XAG= dipped 3.1% to $15.14 and
platinum XPT= was down 1.6% at $770.92.