The prices of gold edged lower on a stronger dollar and doubts about U.S. President Donald Trump’s plan to reopen the American economy while the COVID-19 pandemic has not yet been completely contained.
U.S. gold futures went down by 0.4% to $1,692.60 an ounce while spot gold dropped by 0.7% to $1,672.62 an ounce as of 0621 GMT. Spot prices plunged by around 2% last Friday on optimism over the restart of the U.S. economy.
The U.S. dollar gained by 0.3% as governments around the world plan to restart their economic activities. Investors are anticipating more bad news on the economic impact of the coronavirus pandemic. Aside from the dollar, the bullion was also affected by the weak physical demand in China and India, the top two gold consumers in the world.
Trump’s restart plan has been opposed by governors in several states. They include Washington Governor Jay Inslee, Virginia Governor Ralph Northam and Maryland Governor Larry Hogan. They refute the president’s claims that they already have enough tests. Inslee also criticized Trump for encouraging people to violate state laws on home quarantine by supporting their protests against stay-at-home measures.
The coronavirus has already infected more than two million people and killed more than 160,000 people around the world.
According to CMC Markets’ chief strategist Michael McCarthy, the firmer dollar appears to have negated the supportive impact of declining optimism on the prices of the precious metal.
Ilya Spivak, a currency strategist at DailyFx, added that the markets seem to be currently divided into risk assets or liquidity. With government bonds, the yen and the dollar on one side and gold and everything else on the other. He predicts that the yellow metal will be one of the first asset types to be liquidated as the economic impact of the pandemic worsens.
Meanwhile, Asian stock investors are waiting for the release of corporate earnings and economic data which they expect to show the impact of the COVID-19 crisis.