Gold prices rose on Monday as investors’ concerns over the economic impact of the Delta coronavirus variant bolstered the metal’s appeal as a safe-haven asset. The U.S. dollar index fell 0.2% after climbing to a 9-1/2-month peak last week. It boosted the demand for gold by making it cheaper for investors using rival currencies.
Spot gold is currently trading at $1,785.23 per ounce as of 0830 GMT.
ING analyst Warren Patterson noted the impact of the Delta variant on the U.S. Federal Reserve’s tapering plan. OCBC analysts added that it capped the bullion’s advance. They predicted that the yellow metal could continue to trade in the range of $1,750-1,800 per ounce in the near term.
DailyFX strategist Margaret Yang added that the MACD indicator is forming a bullish crossover suggesting upward momentum. She sees an immediate resistance level at $1,785 and support at $1,750.
In a clear sign of the impact of the Delta variant, the Fed rescheduled its annual economic symposium in Jackson Hole on August 27. And instead of meeting in person, they decided to hold it virtually in compliance with the country’s COVID-19 safety guidelines.
Also, Dallas Federal Reserve President Robert Kaplan admitted that he needs to adjust his view on withdrawing economic support in light of the growing number of Delta variant infections. He is one of the strongest supporters of tapering stimulus. Kaplan said the virus is delaying return to work and affecting the hiring of workers and industrial productivity.
In physical trading, gold demand weakened in major Asian hubs due to a seasonal lull and higher domestic prices. In China, gold premiums dropped from $5-10 to $3-6. Indian dealers also charged lower premiums after the bullion soared to about 47,350 rupees per 10 grams. Jewelers plan to go on a strike to protest mandatory hallmarking of gold jewelry and artifacts. They argue that it disrupts trading because it takes ten days to hallmark jewelry and hallmarking centers have limited capacity.
In a related development, the holdings of the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, fell 0.3% on Friday to 1,011.61 tons. The U.S. Commodity Futures Trading Commission reported that market speculators raised their bullish stance in COMEX gold contracts in the week that ended on August 17.