Gold Under Pressure Amid Expectations for US Economy to Reopen Soon
Gold prices are starting the brand new trading week on a bearish note, falling to the lowest levels in over a week over rising hopes for economic activity to resume in the US soon. At the time of writing, GOLD is trading at a little above $1,680.
Gold has also weakened after the US dollar strengthened by 0.1% as a safe haven currency owing to the high levels of uncertainty in markets about the extent of economic impact the coronavirus pandemic could create. The US dollar shares a negative correlation with the yellow metal and when it strengthens, it becomes more expensive for holders of other currencies to purchase gold.
Despite the continued increase in the number of cases and death toll, US President Donald Trump is keen to get the economy back on its feet, and more Americans are taking to the streets protesting against the extended shutdowns. Even though the US government is looking to release additional aid to support small businesses affected by the shutdowns, expectations are high that some economic activity could restart in the coming weeks.
The precious metal’s prices also remain under pressure as the demand for physical gold is on the decline among leading consumers like China and India as a result of the extended lockdowns. In China, where economic activity has recently resumed, dealers are offering heavy discounts to entice consumers to make purchases but consumers remain cautious about their spending in the wake of the crisis for now.
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