The price of Gold has pulled back in today’s trading session after reaching an 8 year high as a rise in coronavirus cases sparked concerns over the economic recovery from the devastating effects of the virus and boosted demand for safe-havens.
Just when things seemed to be getting back to some sense of normality in countries such as the US, where several states began reopening for business which included retail shops and restaurants, the number of coronavirus infections once again spiked. This raise fears of a 2nd round of the deadly outbreak which would bring the fragile economic recovery to a halt and in turn boosted demand for gold.
"Uncertainty about the coronavirus, particularly in the U.S., which could put the brakes on an economic recovery, and the ultra-loose monetary policy of central banks are giving support to gold," said Commerzbank analyst Daniel Briesemann.
The gold price was looking to break through the phycological $1800 barrier before it was brought to a halt after strong economic data from the US and a potential vaccine for the coronavirus boosted demand for the U.S. dollar which makes holding gold more expensive for other currency holders.
U.S. manufacturing figures hit the market yesterday at their highest levels in more than a year yesterday and if such positive data as this continues over the coming weeks we may see the precious metal unable to make any further solid progress.
A coronavirus vaccine developed by German biotech firm BioNTech and US pharmaceutical giant Pfizer has shown potential and was seen to be fairly positive in early-stage human trials.
“A renewed sense of optimism over the U.S. economy recovering quicker than expected may fuel the risk-on mood, ultimately denting appetite for safe-haven assets including gold,” said FXTM analyst Lukman Otunuga.