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PRECIOUS-Gold falls as fading U.S. stimulus hopes benefit dollar
Published at 15/10/2020 at 13:02

* Surging cases in Europe prompt fresh restrictions

* Equities march lower on virus worries, stimulus doubts

* Interactive graphic tracking global spread of coronavirus: open in an external browser

(Updates prices)

By Nakul Iyer

Oct 15 (Reuters) - Gold fell on Thursday as the dollar gained after U.S. Treasury Secretary Steve Mnuchin dimmed hopes for a new fiscal stimulus package before the Nov. 3 presidential election.

Spot gold was down 0.4% at $1,893.34 per ounce by 1147 GMT, after rising as much as 1.2% on Wednesday. U.S. gold futures fell 0.5% to $1,897.10 per ounce.

"The dollar just continues to be the preferred source of safe-haven flows which has negatively impacted gold," said OANDA analyst Craig Erlam.

Mnuchin said he and Democratic lawmakers were "far apart" on terms for a coronavirus economic relief package, and that a deal would be hard to reach before the election, souring risk sentiment and pushing investors to seek safety in the dollar.

"If we're going to really generate upside momentum to take us through $2,000 in gold, we need to see more than a stimulus deal," OANDA's Erlam said.

Gold, considered a hedge against inflation, currency debasement and uncertainty, has gained more than 24% this year, driven mainly by unprecedented levels of global stimulus to cushion economies from the pandemic-induced slump.

"As we get closer to the election and if it becomes more apparent that the Democrats may win, then gold may see a rise given their planned spend is significant higher, but at the moment the market is waiting for further clarity," said Cameron Alexander, manager of precious metals research at Refinitiv Metals Research.

Aggravating fears for a hoped-for economic recovery, a surge in COVID-19 infections across Europe prompted tighter restrictions.

Market participants also kept a close watch on developments in ongoing Brexit negotiations as a two-day summit of European Union leaders began on Thursday.

Elsewhere, silver slipped 1.7% to $23.87 per ounce, platinum fell 0.5% to $852.54 and palladium dropped 0.5% to $2,333.56.

(Reporting by Nakul Iyer in Bengaluru Editing by Mark Heinrich, Kirsten Donovan)

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