Gold extends gains after Trump tests positive for COVID-19

Gold extended gains on Friday en route to its best week in nearly two months as investors sought safe-haven assets after US President Donald Trump tested positive for COVID-19.

Spot gold was up 0.5% at $1,915.34 per ounce by 0645 GMT, reversing losses from early Asian trade. US gold futures rose 0.3% to $1,922.20.

Bullion has gained 2.9% so far in the week, heading for its biggest weekly percentage rise since the week ended Aug. 7.

"The Trump COVID-19 diagnosis has caused an immediate spike in gold prices as investors rush to (safe-) haven positioning," said Jeffrey Halley, a senior market analyst at OANDA.

"We expect risk-aversion will remain elevated... Depending on how this situation evolves over the weekend, notably if more members of the US government's senior leadership are diagnosed positive, gold could be set for an extended rally." 

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US stock index futures sank as much as 2% on the news that Trump and his wife Melania had tested positive for COVID-19 and were going into quarantine, coming weeks ahead of elections.

"This news should be favourable to gold because we probably going to see stimulus at some point in time soon. People should be owning gold here," said Stephen Innes, chief market strategist at AxiCorp.

On Thursday, the US House of Representatives approved a $2.2 trillion Democratic plan to provide more economic relief from the COVID-19 pandemic.

Gold tends to benefit from widespread stimulus measures as it is widely viewed as a hedge against inflation.

Gold also shrugged off a buoyant dollar. Elsewhere, silver gained 0.7% to $24.07 per ounce and has risen more than 5% so for this week. Platinum eased 0.2% to $894.82 and palladium edged 0.1% lower to $2,311.95.

Reuters