The prices of gold declined slightly on Monday after the U.S. dollar index rose by 0.2% against a basket of rival currencies. It made the yellow metal more expensive for investors using other currencies. But gold’s slide was capped by the lingering fears over the continuing surge of new COVID-19 infections around the world and kept the bullion above the psychological price level of $1,800 an ounce.
Spot gold is currently trading at $1,810.19 per ounce as of 0802 GMT.
CMC Markets’ chief strategist Michael McCarthy said that technical indicators suggest that the greenback could strengthen and this is the reason for the slip in gold prices. But he believes that the price of the precious metal is still in the upward trend because some traders and investors are not convinced about the projected V-shaped recovery of the global economy.
Phillip Futures added that gold investors appear to be getting addicted to central banks releasing large stimulus measures that influence their market expectations. But they could be disappointed if central banks notice signs of economic progress or inflation.
According to a Reuters’ rally, there already more than 14.38 million COVID-19 cases around the world and more than 600,000 deaths. In the U.S., new cases continue to surge and total cases have reached 3.7 million. It is almost as many as the number of infections in the next three countries hardest-hit by the pandemic including Brazil, India and Russia.
Underscoring the economic impact of the pandemic, Japan’s exports dropped by 26.2% in June compared to the same month of the previous year. In the European Union, leaders are at an impasse over the proposed 740-billion-euro plan to revive their economies hammed by the coronavirus crisis.
In a related development, the U.S. Commodity Futures Trading Commission reported that market speculators have lowered by bullish stance in COMEX gold contracts for the week that ended on July 14.
In physical gold trading, the yellow metal remained out of favor among consumers in China and India last week because of virus fears. But it was in high demand in Japan and Singapore as investors there attempt to hedge their investments.