By Barani Krishnan
Investing.com - Once again, gold’s been beaten by the dollar in investors’ rush for a safety hedge amid a new global wave of coronavirus cases.
The yellow metal, the traditional haven of choice, has increasingly found its nemesis the greenback a competitor over the past two years when calamity struck, whether it was Covid-19 outbreaks, tumbles on Wall Street or breakdown in U.S.-China trade endeavors.
The phenomenon was on a display again on Monday as both U.S. gold futures and the spot price of gold fell under the $1,700 support level, while the dollar index regained its perch above the key 100-point mark critical to dollar bulls.
Gold is “very much in consolidation mode around the $1,700 level” said Craig Erlam, analyst at New York-based OANDA. “The dollar has been a major barrier for a burst higher … as economies reopen.”
The White House is suffering a mini-outbreak of Covid-19 with Vice President Mike Pence’s Press Secretary Katie Miller testing positive, while Anthony Fauci and Robert Reid, two other senior health officials on the coronavirus task force, are on self-quarantine, according to reports. Pence and President Donald Trump have tested negative so far.
On the global front, both China and South Korea reported new spikes in coronavirus cases, with Seoul recording 34 new cases, its biggest single-day jump in about a month. In Germany, the closely-watched reproduction rate Covid-19 had climbed to 1.1, meaning 10 people with the virus could infect on average 11 others.
New York-traded gold futures for June settled down $15.90, or 1%, at $1,698 per ounce.
Globally-traded spot gold, which tracks real-time prices in bullion, was down $5.46, or 0.3%, at $1,697.88 by 3:08 PM ET (19:08 GMT).
The dollar index, which pits the dollar against a basket of six currencies, was up 0.5% at 100.26.
Gold was also weighed by an unexpected rebound on Wall Street, where the S&P 500 turned positive after a weak start.