Gold price eases as Coronavirus treatment hopes lift risk sentiment

Gold price edged lower on Thursday as risk appetite improved after positive trial results of an experimental COVID-19 treatment and a jump in oil prices, while the U.S. Federal Reserve`s vow to support the battered economy underpinned the safe-haven metal. Spot gold fell 0.1% to $1,708.85 per ounce by 0141 GMT. U.S. gold futures rose 0.7% to $1,725.00 per ounce.

Asian equity markets were poised to gain, tracking Wall Street`s rally after positive trial results of an experimental COVID-19 treatment, Fed`s pledge to shore up the economy and a jump in oil prices. The dollar nursed losses after the Fed left the door open to more monetary easing and dampened expectations for a quick economic recovery from the coronavirus pandemic.

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The Fed left its kept interest rates near zero and repeated a vow to use its "full range of tools" to shore up the economy that could feel the weight of consumer fear and social distancing for a year or more. The Bank of England faces the nearly impossible task of putting numbers on the scale of the coronavirus recession next week, when it must also decide whether to expand its already huge 645 billion pound bond-buying programme.

Gold tends to benefit from widespread stimulus measures as it is often seen as a hedge against inflation and currency debasement. The U.S. economy contracted in the first quarter at its sharpest pace since the Great Recession as stringent measures to slow the spread of the virus almost shut down the country, while economists expect an even sharper contraction in GDP in the second quarter.

Factory activity in China expanded for a second straight month in April as more businesses resumed work from the coronavirus-led shutdowns, but a worsening slump in export orders pointed to a long road to recovery.