The prices of gold went up on in early trading on Monday as the resurgence of COVID-19 infections lowered hopes for a quick economic recovery and drove investors towards safe-haven assets. The sharp increase in second-wave infections has dampened investors’ risk appetite and increased capital inflows into safe-havens.
Spot gold is currently trading at $1,770.04 an ounce as of 0832 GMT.
According to ANZ analyst Daniel Hynes, the fresh outbreak of COVID-19 around the world, particularly in the U.S., has increased investors’ appetite for safe-haven buying. According to a Reuter’ tally, the coronavirus death toll globally has already reached more than 500,000 yesterday. The situation favors the bullion because it is a safe investment during times of financial and political uncertainty.
A survey of economists conducted by Reuters found that the majority of them believe that the prospect of global economic recovery has stayed the same or worsened over the past month. In the U.S., several states including California, Texas and Florida have ordered the closure of some bars as coronavirus cases reached record levels every day. Other areas including San Francisco and Washington State have canceled plans to reopen businesses.
In Japan, retail sales plummeted at a double-digit rate for the second consecutive time last month as lockdown measures pushed down consumer confidence. On physical gold trading, discounts in India and China widened last week as the increase in coronavirus infections restricted the purchasing of the yellow metal.
On the technical front, Reuters’ technical analyst Wang Tao predicts that spot gold prices may break the price resistance level at $1,778 an ounce and possibly reach $1,789.
In a related development, market speculators have raised their bullish stance in COMEX gold contracts for the week that ended on June 23. Also, the SPDR Gold Trust, the largest gold-backed exchange-traded fund in the world, reported last Friday that its holdings grew by 0.3% to 1,178.90 tons. This reflects current market sentiments.