The prices of gold barely moved on Wednesday as investors paused a rally spurred by a surge in new COVID-19 infections and anticipation of more economic stimulus from the Federal Reserve. Despite this, the yellow metal remains close to its highest pricing since November 2011.
Spot gold is currently trading at $1,798.91 an ounce as of 0927 GMT.
Axicorp’s chief market strategist Stephen Innes commented that the market focus continues to be the developments in the U.S. He said that if the coronavirus cannot be contained, then the bullion is likely to reach $1,800 an ounce simply because the Fed will be forced to issue additional stimulus measures. HSBC analysts added that the uncertainties generated by the pandemic are likely to support the price rally of the precious metal well into 2021.
The number of COVID-19 infections in the U.S. has surpassed the three million mark yesterday. Many states reported record numbers of new cases and Florida is facing a possible shortage of ICU hospital beds. Atlanta Federal Reserve Bank President Ralph Bostic, San Francisco Fed President Mary Daly and Cleveland Fed President Loretta Mester have expressed concern that the virus surge could negate the recent consumer spending and job gains. But Fed Vice Chairman Richard Clarida immediately pledged more economic support from the central bank saying they have a lot of accommodation in place.
Meanwhile, Melbourne has re-imposed lockdown measures for six weeks as the city attempts to contain the recent spike in new COVID-19 cases. In the EU, the European Commission forecast a deeper recession in the eurozone and a slower recovery in 2021.
On the technical front, Reuters’ technical analyst Wang Tao said spot gold is currently facing a resistance price at $1,796 an ounce and a break above this level could push the metal to $1,831.
In a related development, the holdings of SPDR Gold Trust, the largest gold-backed exchange-traded fund in the world, increased by 0.66% yesterday to 1,199.36 tons which reflects current market sentiments.