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Gold Steady as Dollar Makes Gains as Safe Haven

Gold Steady as Dollar Makes Gains as Safe Haven

Posted Thursday, October 29, 2020 by
Arslan Butt • 1 min read

Gold prices are trading mostly unchanged from the previous session into Thursday, close to the lowest levels seen in a month, as the US dollar gains as a safe haven currency amid the resurgence in cases and lockdowns across Europe. At the time of writing, GOLD is trading at a little above $1,882.

On Wednesday, France and Germany announced partial lockdowns to combat the surge in fresh coronavirus cases, raising fears that economic recovery could get further delayed and weakened. This sentiment is supporting the safe haven appeal of gold in global financial markets.

However, gains in gold remain limited as the US dollar has also strengthened due to this sentiment. Gold shares a negative correlation with the dollar, and whenever the currency strengthens, it becomes more expensive for holders of other currencies to purchase the yellow metal, denting its appeal as a result.

Gold traders also waiting on the sidelines before making any moves ahead of the ECB policy decision due later today. While traders do not expect announcement of more stimulus measures in this month’s meeting, the second wave of the pandemic underway across Europe could force the central bank to take action in the next meeting.

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