Gold prices treaded lower on Monday despite a surge in coronavirus cases in more than 20 US states coupled with a fresh outbreak in Beijing over the weekend, which raised fears of a second pandemic wave.
Spot gold fell 0.7% to $1,719.09/oz by noon EST, but held above the $1,700/oz mark throughout the morning session. Gold futures also declined 0.6% to $1,719/oz on the Comex in New York.
Meanwhile, the US dollar steadied against most other currencies and equities opened lower as investors weigh the likelihood of another wave of covid-19 pandemic emerging.
“The greenback seems to be back in fashion amid fears of a second wave of coronavirus destabilizing global growth and stability,” FXTM analyst Lukman Otunuga told Reuters.
“Gold remains in a very wide range with support at $1,670 and resistance at $1,747. A breakout above this … could inspire an incline towards $1,765.”
“We are in a bit of a holding pattern waiting to see whether or not we do get a confirmed second wave, and if economies start to shut again, we could see gold go higher,” said Michael Hewson, chief market analyst at CMC Markets UK.
Over the past week, bullion had its strongest performance since April 10, rallying by 2.6% against a backdrop of rising coronavirus cases. The precious metal also faces deflationary pressures in the short-term, according to Saxo Bank analyst Ole Hansen.
“Inflation is collapsing with the drop in consumer demand and the slow reopening of economies. So that’s removing the demand for gold.”
Elsewhere, silver prices fell 0.9% to $17.33/oz, while palladium and platinum rose 0.1% and 1.0% to $1,937/oz and $821/oz respectively.
(With files from Reuters)