Gold Holds Steady Over Economic Woes of the Coronavirus Pandemic
Arslan Butt • 1 min read
On Wednesday, gold prices are trading somewhat steady even as the US dollar strengthens as a result of equities edging lower as worries about the recession in the global economy once again come back in focus. At the time of writing, GOLD is trading at a little above $1,749.
Worries about the economic impact of the coronavirus pandemic returned to haunt global markets after the Congressional Budget Office revealed that the US economy could take until next year to return to pre-pandemic levels even though it would begin rebounding by Q3 2020. This sentiment boosted the safe haven appeal of gold amid raised worries about the recession in the US as well as global economy in the wake of the coronavirus crisis.
Gold prices also enjoyed some support from recent weak economic data releases from around the world. While US homebuilding registered the sharpest fall ever recorded during April, business confidence among Japanese companies fell to the lowest level seen in several decades during May.
While these figures further boosted the safe haven metal, gains in gold remained under pressure as the US dollar strengthened by around 0.2% against other major currencies. As we know, gold shares a negative correlation with the dollar, and a stronger dollar makes the yellow metal more expensive for buyers who use other currencies to purchase gold.