The prices of gold held in a range in early trading on Monday while the dollar recovered slightly higher.
U.S. gold futures rallied by 1.43% to $1,648 an ounce. Spot gold prices also gained by 0.38% to $1,624 an ounce as of 10:46 GMT.
A factor weighing on the recent swings in the precious metal is the fall in the U.S. dollar which earlier in the month was in strong demand. Meanwhile, oil prices and the Asian stock markets fell under pressure again because of fears that the pandemic could last for months.
In the U.S., the House of Representatives has already approved a $2.2 trillion stimulus package to help individuals and businesses weather the economic downturn caused by the coronavirus crisis. It is the largest ever in history, but some experts believe it may not be enough. Another bad news for the U.S. is that it has become the new epicenter of the pandemic over the weekend with over 137,000 cases and 2,400 deaths. This forced President Donald Trump to reverse his decision to re-open businesses by mid-April. He was also warned by National Institute of Allergy and Infectious Diseases director Dr. Anthony Fauci that more than 100,000 Americans could die from the outbreak.
International Monetary Fund chair Kristalina Georgieva warned that the crisis has already sent the global economy into a recession and called on governments to respond with “massive spending” to prevent bankruptcies and debt defaults in emerging markets. European Central Bank president Christine Lagarde also called on European Union leaders to take decisive actions to address the economic impact of the pandemic.
According to IG Markets analyst Kyle Roda, the fiscal stimulus package of the U.S. lifted the dollar but negatively affected gold prices. CMC Markets chief strategist Michael McCarthy added that if the global economy deteriorates further then the yellow metal could be stripped off its safe-haven status.
In a related development, the holdings of the largest gold-backed exchange-traded fund in the world SPDR Gold Trust grew by 1.2% to 964.66 tons as of last Friday.