By Barani Krishnan
Investing.com - Gold prices eased on Monday as trading in safe-havens retreated amid a fresh uptick in risk despite a surge in new coronavirus infections in the United States and various other countries.
Wall Street’s Dow index fell more than 2% at the open but recouped all of that by late in the afternoon to show a gain of more than 0.5% after White House Economic Adviser Larry Kudlow said President Donald Trump was determined not to close the U.S. economy again over a new surge in Covid-19 cases.
Kudlow spoke as 20 of the 50 US states, including Texas, South Carolina, Utah, Arizona, North Carolina, Arkansas, Alabama, Oregon, California, Nevada, and Florida reported seven-day rolling average highs for new Covid-19 infections. The total number of cases since the February outbreak now stands at 2.2 million.
While the autonomy for keeping state economies open rests with the respective state governors and not Trump, Kudlow’s remarks, nevertheless, sparked a recovery in a stock market desperate for some good news after the worst selloff in three months last week.
Aside from the comeback in stocks, a stronger dollar from earlier in the session also weighed on gold.
U.S. gold futures for August delivery settled down $10.10, or 0.6%, at $1,727.10 per ounce. Last week, the gold futures benchmark rose more than $54, or 3.1%.
Spot gold, which tracks real-time trades in bullion, slid $3.50, or 0.2%, to $1,727.36 by 2:47 PM ET (18:47 GMT).
“Gold is looking to test the lower bound of the range once again as the market narrative of a second wave grows stronger,” TD Securities said in a note.
“But with little new information in contagion trends, the recent fears and weakness in the market may be exaggerated by the latest news cycle rather than a secondary economic shock. With that said, breakevens have yet to show renewed fears of a major deflationary shock, and the yellow metal has held support thus far, unlike the initial bout of gold weakness witnessed in March.”