Gold prices finished modestly lower Monday, knocked down as the dollar staged a mini-rebound amid growing concerns about a possible variant of the novel strain of coronavirus that causes COVID-19.
Worries about increased lockdown procedures in London and other parts of the world drove investors to the perceived safety of dollars and compelled some traders to momentarily sell some of their bullion holdings, experts said.
Bullion has tended to slide, at least momentarily, as worries about the virus have caused broader selling in risk assets and prompted some flight to cash and out of precious metals.
“Today’s price action for gold reminded traders of the panic selling that occurred in March,” wrote Edward Moya, senior market analyst at Oanda, in a Monday research note.
Virus concerns overshadowed news that Congress has reached an agreement on a roughly $900 billion coronavirus relief package, which has been viewed as a part of the near-term bullish thesis for bullion buying, supporting expectations for more government spending and a deflating greenback.
Precious metals are seen as a hedge against currency-devaluing fiscal spending and gold, in particular, has benefited from that idea in recent trade, experts say.
“Congress is poised to deliver a second stimulus package today, but that has mostly been priced in for gold,” Moya wrote.
“Gold prices has appreciated almost 7% this month and could extend gains if bulls are able to maintain control above $1900. But this level could prove to be reliable resistance, which means a decline back towards $1850 would be on the cards,” wrote Lukman Otunuga, senior research analyst at FXTM, in a note.
February gold GCG21, +0.08% lost $6.10, or 0.3%, lower to settle at $1,882.30 an ounce, retreating from around its highest level since November after the metal on Friday logged a 2.5% weekly gain based on the most-active contract for the metal.
Gold’s slide on Monday also comes as the U.S. dollar regained some lost ground after a steady retreat for the U.S. unit, as measured by the ICE U.S. Dollar Index DXY, +0.08%. The buck was up 0.2%, as investors turned to dollars amid worries about a potentially faster-spreading coronavirus strain and tightened lockdown measures in Europe.