Gold prices are recovering slightly, rising on the back of weakness in the US dollar as traders turn cautious ahead of the upcoming Fed meeting even as worries about the economic impact of the coronavirus pandemic remain in markets. At the time of writing, GOLD is trading at a little above $1,695.

The US dollar has weakened to the lowest level in nearly three months, helping gold make gains as it turns more affordable for holders of non-dollar currencies. The weakness in the dollar was driven by fears of the Fed turning more dovish and unleashing more stimulus measures to prop up the US economy in the wake of the ongoing coronavirus crisis.

While the likelihood of the Fed cutting interest rates below zero have reduced on the back of a better than expected NFP report from the US, there are still concerns of additional stimulus measures being rolled out by the central bank as the US economy attempts to recover after the multiple weeks of lockdown. A dovish Fed boosts the safe haven appeal of gold and is supporting the bullishness in the yellow metal for now.

In addition, worries about the economic fallout from the pandemic still linger with the World Bank’s latest reports forecasting a 5.2% contraction in the global economy as a result of the coronavirus this year. In case uncertainties and lockdowns extend, the World Bank has cautioned that these estimates could be revised even lower as the economy could be hit even harder if the situation aggravates.