Gold Hits All-Time High on Virus Fears, Gains Capped by Stronger Dollar

Gold News

The prices of gold jumped to a historic high on Monday as rising COVID-19 cases boosted the demand for safe-haven assets. But the advance of the yellow metal was limited by the recovery of the U.S. dollar that gained 0.3% today, after dropping to a more than a two-year low last week. The greenback is considered a rival safe-haven and its decline will make the bullion less expensive for investors using other currencies.

Spot gold is currently trading at $1,973.29 per ounce as of 0806 GMT.

CMC Markets’ chief strategist Michael McCarthy noted that the deteriorating market sentiments due to growing infection rates are supportive of gold. However, the situation is also lifting the value of the dollar. Phillip Futures’ analyst added that the expiration of the federal unemployment insurance in the U.S. is likely to affect consumer and spending and keep Federal Reserve dovish. He said this boosted the demand for safe-havens.

The coronavirus has already infected more than 17.96 million people around the world and more than 4.6 million in the U.S. The government is already working on another round of stimulus and relief measures to cushion the economy from the impact of the pandemic. But White House Chief of Staff Mark Meadows is not optimistic that the White House and lawmakers would be able to reach an accord on the next round of economic relief in the near-term.

The surge in COVID-19, together with the tensions between the U.S., has erased optimism for a quick economic recovery and drove capital inflows into safe-havens.

Meanwhile, the markets are waiting for the release of the U.S. ISM Manufacturing Purchasing Managers Index (PMI) and the IHS Markit Euro Area Manufacturing PMI for August 2020 that are both due today.

On the technical front, Reuters’ technical analyst Wang Tao predicts that spot gold prices may fall back to the $1,943-$1954 per ounce range.

In a related development, the U.S. Commodity Futures Trading Commission reported that market speculators lowered their bullish stance in COMEX gold contracts for the week that ended on July 28.

 

Source – Gold soars to record high as virus fears lift safe-haven demand