Gold prices are enjoying support early on Wednesday after having surged to the highest level since October 2012 during the previous session, buoyed by a weakness in the US dollar and by rising hopes for more stimulus measures by central banks around the world. At the time of writing, GOLD is trading at a little above $1,768.

The safe haven appeal of gold remains supported by market expectations for more stimulus measures being rolled out to shield economies from the impact of the coronavirus pandemic. This sentiment of increased dovishness by central banks as well as governments has caused the yellow metal prices to gain by as much as 16% so far this year.

Gold prices have also gained as a result of the US dollar weakening against other major currencies. As we know, the US dollar shares a negative correlation with gold prices, as a weaker dollar makes gold more attractive for holders of other currencies to purchase the yellow metal.

The prospect of US-China tensions reigniting are also exerting upward pressure on gold prices lately. Even though President Trump and other government officials sought to reassure markets that the phase one trade deal remains intact, relations between the two world leaders continue to remain under strain, and this could impact attempts of economic recovery post the pandemic.

In recent days, the yellow metal has also gained favor as a result of a spike in the number of coronavirus cases across some US states and some other countries, which has raised the risk of a second wave. According to latest official reports, over 9 million people worldwide have contracted coronavirus so far while the death toll has crossed 473k worldwide.