The surge in COVID-19 cases has strengthened gold prices which has weakened the dollar ahead of the meeting of the Federal Reserve (US Central Bank) this week.
According to the latest financial market statistics today, Monday, palladium, which is used in the automobile industry, stabilized near an unprecedented peak it reached last week.
DailyFX reported an increase in gold prices in the spot market 0.2% to $1,781.08 an ounce by 5:26 GMT. US gold futures rose 0.1% to $1780.30 an ounce.
“The COVID-19 situation in India and Japan is getting worse,” said Margaret Young of DailyFX. Therefore, this enhances the demand for safe havens, which leads to higher gold prices, ”he said, adding that the decline in the dollar supports prices more.
Oil prices fell today, Monday, against the backdrop of fears that COVID-19 cases would increase which would squander demand for fuel in the third largest importer of oil in the world.
The latest money market statistics indicated that Brent crude futures fell 38 cents, equivalent to 0.6%, to $65.73 a barrel by, after a 1.1 percent rise on Friday.
U.S. West Texas Intermediate crude futures fell 31 cents, or 0.5 percent, to $61.83 a barrel, after rising 1.2 percent on Friday.
On a weekly basis, the two benchmarks lost about 1% last week, which indicates that the Coronavirus and its repercussions greatly contributed to hitting the markets, especially the black gold market.
Shrinking demand on fuel
“Market sentiment was dented on worries that surging number of COVID-19 cases in some countries, especially in India, will slash fuel demand,” Kazuhiko Saito, chief analyst at commodities broker Fujitomi Co.
It is noteworthy that earlier, Michael McCarthy, chief market analyst at CMC Markets, said that the combination of the decline of the US dollar and the decline in interest rates at this time supports gold despite the improvement in the economic outlook.
“We’ve got the momentum. But of course we are at a very important point having just got through that $1,765 level. While we hold above the $1,765 level, the outlook for gold is positive in the short term,” McCarthy said.
The dollar index was languishing near a one-month low against its rivals, making gold less expensive for other currency holders.