Gold edged up overnight as concerns over a fresh coronavirus outbreak in China countered a surge on Wall Street driven by a record rise in US retail sales and optimism over a COVID-19 drug.

Spot gold rose 0.09 per cent to $US1,726.17 per ounce by 1852 GMT. US gold futures settled 0.5 per cent up at $US1,736.50.

Raising concerns over the pandemic, Beijing’s city government raised its COVID-19 emergency response level to II from III, according to state media. There have been more than 100 new cases confirmed in recent days.

“Gold is gaining after Beijing suddenly tightened the measures, with schools shut and people advised not to leave the city unless necessary,” said Alex Turro, market strategist at RJO Futures.

Gold shook off earlier slight declines, which were driven by the surge on Wall Street after data showed US retail sales rose 17.7 per cent last month, the biggest advance on record.

Equities also found support from data showing reduced COVID-19 death rates in a trial of a generic steroid drug.

“Every time the (gold) price falls, it seems that investors are seeing it as a buying opportunity,” ActivTrades chief analyst Carlo Alberto De Casa said in a note.

Gold’s fundamentals are strong, given the low interest-rate environment and uncertainty over the pandemic, RJO Futures’ Bob Haberkorn said.

The Bank of Japan said it expected to pump around 110 trillion yen ($US1 trillion) into the economy.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

Investors also kept a close eye on escalating tensions globally, as Indian and Chinese troops clashed at their disputed border, while North Korea blew up an inter-Korean liaison office set up in a border town.

Palladium gained 1.54 per cent to $US1,936.81 per ounce, after earlier hitting its highest level since June 10, at $US1,965.21, while platinum rose 1.52 per cent to $US823.86.

Silver was up 0.1 per cent at $US17.45.

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