Gold gains as recession looms even as economies reopen

By Asha Sistla

(Reuters) - Gold rose on Tuesday amid uncertainty over how economies would emerge from a deep slowdown, although optimism about a potential vaccine for the novel coronavirus capped bullion's advance.

Spot gold rose 0.4% to $1,738.34 per ounce by 11:33 a.m. ET. U.S. gold futures gained 0.5% to $1,742.10.

"Fundamentals for gold have never been better in history. Unless we have more optimism about the vaccine, we will begin to see an upward momentum to a new high," said Jeffrey Sica, founder of Circle Squared Alternative Investments.

"Any news of a setback in re-integration of businesses into the economy will ultimately lead gold higher."

Massive global stimulus to limit the economic damage from the coronavirus have supported gold, since it's widely viewed as a hedge against inflation and currency debasement.

Driving demand for safe havens, meanwhile, were fears of a further deterioration in China-U.S. relations, with Nasdaq Inc set to unveil restrictions that will make it more difficult for some Chinese companies to list there.

U.S. stocks edged lower as investors booked profits from Monday after drugmaker Moderna said its experimental COVID-19 vaccine showed promising results in a preliminary trial.

Monday's jump in equities and oil had caused gold to retreat from a multi-year peak.

"Right now, the market is focused on the aftermath of the big rally in stocks yesterday ... but the underlying demand has not gone away," said Saxo Bank analyst Ole Hansen, adding a weaker economic outlook, central bank measures and geopolitical tensions should keep gold prices high.

Elsewhere, palladium gained 1% to $2,032.34 an ounce, to hit a near one-month peak of $2,109.20.

Platinum jumped 1.8% to $832.47 and silver rose 0.8% to $17.31.

(Reporting by Asha Sistla and Brijesh Patel in Bengaluru; Editing by Bernadette Baum)