Gold prices fell on Tuesday as the dollar strengthened on growing worries about a mutant coronavirus strain in UK, while market response to a long awaited U.S. economic stimulus package limited bullion’s losses.
Spot gold edged 0.1% lower to $1,873.76 per ounce by 1011 GMT, U.S. gold futures fell 0.2% to $1,879.20.
“The weakness we’re seeing now is driven by end of year profit taking, but it’s also driven by the fact that we’ve seen the dollar strengthen as risk markets become more risk averse with the latest COVID news from the UK,” said Saxo Bank analyst Ole Hansen.
The dollar index firmed, while holding close to a more than one-week high as Britain remained stuck in COVID-19 isolation due to a highly infectious new coronavirus strain. [USD/]
Bullion hit a six-week high of $1,906.46 on Monday, mainly supported as U.S. Congress approved a $892 billion coronavirus aid to support the pandemic-ravaged economy, with President Donald Trump expected to sign the package into a law soon.
Gold has climbed 23% this year, helped by a raft of pandemic stimulus measures that stoked fears of inflation. The precious metal is often used as a hedge against inflation.
On the technical front, gold may revisit its Nov. 30 low of $1,764.29 per ounce next quarter, according to Reuters analyst Wang Tao.
In other metals, silver fell 0.9% to $25.93 an ounce, but hovered closed to a more than three-month peak hit in the previous session.
“(Silver) is tracking gold, it’s also had the extra dimension of being supported by the rally we’ve seen in the industrial metals. It’s got a green transformation steam attached to it, given the expectations for increased demand for solar panels next year,” added Saxo Bank’s Hansen.
Platinum was down 0.1% to $1,008.12, while palladium rose 0.3% to $2,315.58.
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