On Monday, the prices of gold reached its highest level since November 9 on a softer dollar. The greenback fell 0.2% against a basket of rival currencies that made the bullion less expensive for investors using other currencies. The precious metal was also supported by the resurgence of coronavirus cases in the U.S. that strengthened hopes for more monetary and fiscal stimulus. Gold benefits from stimulus measures since it is generally considered as a hedge against currency debasement and inflation.
Gold prices went down by 3.3% last week after Pfizer reported that the initial trial results showed that its COVID-19 vaccine was more than 90% effective.
Spot gold is currently trading at $1,893.38 per ounce as of 0808 GMT.
Yesterday, the number of COVID-19 cases in the U.S. passed the 11 million mark. This prompted the top advisers of President-elect Joe Biden to call on the government for urgent action to address the pandemic. They also warned Republicans that transition delay could jeopardize the efforts to control the coronavirus and urged Congress to pass financial relief measures even before Biden takes office.
In Germany, Federal Minister for Economic Affairs and Energy Peter Altmaier announced that the country could be under tighter restrictions for four to five months to curb the outbreak.
Axi’s chief global market strategist Stephen Innes commented that there are still problems in structural economies, particularly in job creations, and this would drive central banks to release more money into the economy between now and the availability of a COVID-19 vaccine.
On the world economy, consumer sentiment in the U.S. unexpectedly declined in early November as people worry about the depleted fiscal stimulus and the resurgence of the coronavirus. But in Japan, the economy grew at an annualized rate of 21.4% in the quarter.
In physical trading, there was a surge in demand for gold jewelry in India last week as consumers took advantage of lower prices and special deals for the Diwali festival.
On the technical front, OCBC Bank’s economist Howie Lee predicted that gold might test a resistance price level at $1,900-$1,905 per ounce. He added that an upward trend would depend on clarity on new fiscal stimulus measures in the U.S.
In a related development, the holdings in the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, dropped by 0.42% last Friday to 1,234.32 tons.