Gold prices are trading cautiously bullish, supported by the prevailing risk-off sentiment in global markets amid fears of fresh lockdowns in countries as coronavirus cases surge. At the time of writing, GOLD is trading at a little above $1,915.

While several European cities have reimposed restrictions, markets are expecting the UK to soon bring back lockdowns as well as cases continue to climb higher. The fresh lockdown measures triggered a sell-off among equities on Monday, sending gold prices higher.

Even though the safe haven appeal of gold remains strong as the market sentiment deteriorates, gains are limited on account of a strengthening in the US dollar. The US dollar shares a negative correlation with gold, but has been finding support as other currencies weaken over the fear of reimposition of lockdown restrictions.

There are also worries about whether the US will release more stimulus initiatives to offset the economic impact of the pandemic. The economic recovery in the US has slowed down with economic data coming in weaker lately, and with existing stimulus measures waning, economic conditions could worsen further.