Dollar trips gold up amid doubts over reopening of US economy

Bengaluru — Gold prices fell to a more than one-week low on Monday, dragged by a firmer dollar amid doubts over US plans to reopen the world’s largest economy as the novel coronavirus pandemic showed no signs of easing.

Spot gold fell 0.3% to $1,679.95 per ounce by 5.16am, having touched its lowest since April 9 earlier in the session. The metal slumped about 2% on Friday on hopes that the US economy might reopen soon.

US gold futures slipped 0.2% to $1,695.20. “Receding optimism [about growth prospects] is a factor I would normally expect to be supportive of gold prices, but we aren’t seeing that at the moment,” said Michael McCarthy, chief strategist at CMC Markets.

“It might have to do with the strength in the US dollar, which hasn’t made a particularly large move, but is higher.”

The dollar, which is considered a safe-haven alternative to gold, found support as investors braced for more dire news on the fallout from the coronavirus and governments across the globe moved only cautiously towards an economic restart.

In the US, governors in states hardest hit by the pandemic sparred with President Donald Trump over his claims they have enough tests and should quickly reopen their economies as more protests are planned over the extension of stay-at-home orders.

Reported cases of the virus have crossed 2.33-million globally and 159,818 people have died, according to a Reuters tally as of Sunday.

Caution gripped Asian share markets ahead of a busy week of corporate earnings reports and economic data expected to show the damage done by the global virus lockdown, while a supply glut sent US crude oil prices plummeting to 20-year lows.

Japan’s exports fell 11.7% in March from a year earlier, data from the ministry of finance showed, reflecting a sharp drop in external demand due to the outbreak.

On the technical front, “gold has tested towards $1,670 [per ounce] in early Asia pricing today [Monday], with key support towards $1,650 in focus,” trading services group MKS PAMP said in a note.

Palladium rose 2.3% to $2,206.12 per ounce, platinum was steady at $775.41 and silver gained 0.6% to $15.22.

Reuters