Futures & Commodities

Gold steady as virus fears offset stronger dollar

A one kilo Swiss gold bar and US dollars gold coins are pictured in Paris on February 20, 2020.
JOEL SAGET | AFP | Getty Images

Gold prices were steady on Monday as investors worried about a spike in COVID-19 cases and the race for next month's U.S. presidential election faced a stronger dollar.

Spot gold was up 0.1% at $1,904.60 per ounce. U.S. gold futures settled mostly unchanged at $1,905.70.

"Gold has been trapped between $1,930 - $1,880. It is waiting to take cues from the election and there's this resurgence of the pandemic," said Phillip Streible, chief market strategist at Blue Line Futures in Chicago. "But the dollar index is up today, (and) has a strong inverse correlation to gold," he added.

A spike in new infections weighed on risk sentiment among investors as cases touched record levels in the United States. In Europe, Italy and Spain imposed new restrictions.

On Sunday, U.S. House of Representatives Speaker Nancy Pelosi said President Donald Trump's administration was reviewing the latest plan for more COVID-19 relief, and she expected a response on Monday.

"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," said Tai Wong, head of base and precious metals derivatives trading at BMO.

"As a result we continue to see demand for gold on dips."

Gold tends to benefit from widespread stimulus measures from central banks because it is widely viewed as a hedge against inflation and currency debasement.

However, safe-haven gains for the U.S. dollar limited gold's appeal, as the dollar index rose 0.3% against its rivals, making gold more expensive for holders of other currencies.

Elsewhere, silver slipped 1.4% to $24.25 per ounce, palladium fell 1.9% to $2,346.46 and platinum shed 3.5% to $869.83.