On Thursday, gold prices fell to an over two-month low as the US dollar strengthened amid the risk-off sentiment in global markets over worries about delay in economic recovery after the coronavirus pandemic. At the time of writing, GOLD is trading at a little above $1,855.

The US dollar has been making gains over the past few sessions as markets worried about economic recovery in Europe getting derailed due to fresh lockdown restrictions driven by a resurgence in the number of cases. Meanwhile, economic data releases and recent comments by Fed officials highlights fears of economic recovery in the US also slowing down.

While this sentiment is supporting the safe haven appeal of gold, gains remain under pressure as the dollar also remains in favor as a safe haven currency. Gold shares a negative correlation with the US dollar as a stronger dollar makes the yellow metal more expensive for holders of other currencies.

Gold also remains supported over Fed officials maintaining a dovish stance on the monetary policy. Recent statements by Fed officials stress on the need for more stimulus and reiterate the central bank’s plans to keep monetary policy loose for several years in order to bring down the unemployment rate in the US.