Gold Stronger On Weaker Dollar And Surging Coronavirus Cases


Gold was seen to steady itself near a one-week high on November 16, 2020, as the US dollar weakened. Also, fears over mounting COVID-19 cases have offset a risk rally that is driven by optimism over a Pfizer vaccine.

Spot gold was little changed trading at $1,889.01 per ounce by 0743 GMT. The precious metal had hit its highest level since November 9 trading at $1,898.81. On their part, the US gold futures were flat hovering around $1,886.70.
The dollar index also hit a one-week trough as the Asian equities hit a record high. The pandemic cases surpassed the 11-million mark in the US on November 15, prompting new restrictions in Washington and Michigan. President-elect Joe Biden’s top advisers called for urgent action to be taken to address this crisis.
Chief global market strategist at financial services firm Axi, Stephen Innes, said that:
“There still are underlying problems in structural economies, with job creation being the biggest problem.”
Action from central banks and governments is essential to stimulate economies. John Williams, New York Federal Reserve Bank President, said on November 13 that the US economy is still is a considerably ‘deep hole’, and increasing infections may slow the rate of growth.
Policymakers Speak
Many Fed policymakers are expected to speak this week, starting with Vice Chair Richard Clarida at 1900 GMT, who will speak at a virtual talk show hosted by the Brookings Institution. A senior commodities manager at Phillip Futures, Avtar Sandu, said in a note:
“Comments from bankers may not be sufficient to rally gold markets to the heights experienced earlier in the year, a dose of fiscal or monetary stimulus may, however, be effective.”
Gold, in most cases, benefits from stimulus measures from central banks since it is perceived to be a hedge against currency debasement and inflation. The precious metal has gained more than 20% in 2020.
Prices plunged 3.3% in the past week after Pfizer said that its experimental COVID-19 vaccine was more than 90% effective according to initial trial results. Silver gained 1.1% to trade at $24.89 per ounce. Platinum gained 1.2% to $899.37, while palladium was 0.9% higher trading at $2,343.90.