(Bloomberg) -- Gold rose, paring a weekly drop, as investors weighed a resurgence of cases in the U.S. and major European economies and the prospects for coronavirus vaccines.
New York Mayor Bill de Blasio said the city was ready for the possibility of closing its schools again, while California passed 1 million infections. In Europe, France and the U.K. reported the most infections yet, and Portugal extended restrictions. Even with the prospect of a Covid-19 vaccine, three of the world’s top central bankers, including Federal Reserve Chairman Jerome Powell, cautioned that a vaccine would not end the economic challenges.
In the coming quarters, factors supporting gold include low bond yields, a weakening dollar due to loose fiscal and monetary policy, and geopolitical tensions, according to Fitch Solutions. In 2021, the metal’s gains will be limited by a limited recovery and the rising odds of a vaccine approval, and prices are forecast to average $1,850 an ounce, it said in a report.
“Gold has turned mixed as support from rising virus risks, mixed economic data from major economies, hopes of additional stimulus measures is countered by weaker investor buying, progress on a vaccine and concerns about U.S. fiscal stimulus deal,” said Madhavi Mehta, an analyst at Kotak Securities Ltd. However, the outlook for gold remains positive amid increasing virus risks, which makes a case for continuing stimulus measures, she said.
Spot gold rose 0.2% to $1,879.73 an ounce at 6:44 a.m. in London, after climbing 0.6% on Thursday. Prices are down 3.6% this week. Silver was little changed. The Bloomberg Dollar Spot Index was steady after two days of gains.