Gold price tops $1,900 on surging coronavirus cases

Gold prices rose past the $1,900 an ounce level on Monday, supported by worries over a spike in covid-19 cases around the globe and uncertainty surrounding the upcoming US presidential election. However, a stronger dollar limited bullion’s advance.

Spot gold was up 0.3% at $1,903.35 per ounce by 11:40 a.m. EST, while US gold futures were 0.1% higher at $1,907.20 per ounce in New York.

“Gold is facing a bit of a headwind from the recent slight rise in real yields,” Nicholas Frappell, global general manager at Sydney-based ABC Bullion, said in a Bloomberg interview.

“Some investors are optimistic over the prospects for US growth. Others are seeing positioning ahead of a Democratic win and assuming that the fiscal consequences will drive bond prices lower and yields higher,” he added.

“Gold has been trapped between $1,930 and $1,880. It is waiting to take cues from the election and there’s this resurgence of the pandemic,” Phillip Streible, chief market strategist at Blue Line Futures in Chicago, told Reuters.

The number of covid-19 cases in the US continues to spike with no signs of letting up. Over the past seven days, the country reported an average of about 68,767 new cases every day, the highest seven-day average recorded since the onset of the pandemic, an analysis of Johns Hopkins University data shows.

Italy and Spain imposed new restrictions over the weekend as a second wave of virus cases sweeps across Europe.

Stimulus deal?

The fading prospects of a US stimulus deal also weighed on risk sentiment among investors.

On Sunday, US House Speaker Nancy Pelosi said the Trump administration was reviewing the latest plan for more covid-19 relief, though a deal with the White House remains elusive, according to Bloomberg.

However, the market remains hopeful that a deal could be reached eventually, which would bode well for gold as it tends to benefit from widespread stimulus measures from central banks.

“Overall bullish sentiment remains strong and deep, with a view that more stimulus will be coming and that it is really only a matter of time,” Tai Wong, head of base and precious metals derivatives trading at BMO told Bloomberg.

(With files from Bloomberg and Reuters)