Gold eases as upbeat U.S. retail sales, drug trial boost investor risk appetite

Gold prices declined amid hopes of a potential COVID-19 drug and a stronger U.S. dollar although worries about surging cases of the novel coronavirus in Beijing limited downside.

Spot gold was trading 0.2 percent down at $1,722.15 per ounce by 0821 GMT, having touched a high of $1,744.91 on Thursday, its highest since June 2. U.S. gold futures fell 0.3 percent to $1,731.

Global cases of the novel coronavirus reached over 8 million, as Beijing officials reported several new COVID-19 cases for the sixth consecutive day, while new infections hit record highs in six U.S. states yesterday, including Texas and Florida.

However, hopes for recovery were supported by data showing U.S. retail sales rose by a record 17.7 percent in May, recovering more than half the losses of the previous two months, with upbeat trial results for a COVID-19 treatment.

Geopolitical tensions and additional stimulus measures from global central banks offered some support to the safe-haven metal. North Korea rejected a South Korea offer to send special envoys and vowed to send back troops to the border, while India reported 20 of its soldiers had been killed in clashes with Chinese troops at a disputed border site in the western Himalayas.

On Tuesday, Federal Reserve Chair Jerome Powell cautioned in his testimony before U.S. lawmakers that a full economic recovery will not occur until Americans are sure the novel coronavirus epidemic has been brought under control.

The Bank of Japan increased its lending packages for cash-strapped firms to $1 trillion from about $700 billion, sticking to its view that the Japanese economy will gradually recover from the pandemic.

The greenback against a basket of currencies traded 0.1 percent down at 96.80, having touched a low of 95.72 on Wednesday, its lowest since March 10. The yield on the benchmark U.S. 10-year Treasury notes rose to 0.761 percent.