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Gold prices were seeing a sharp drop to start the last full week of September as an apparent flight to dollars, partly fueled by rising global risks, including the implementation of renewed COVID-19 lockdown measures in Europe, pressured bullion lower.
A selloff across global equity markets, tied in part to worries over the rise in COVID-19 cases and the potential for the renewal of restrictions on activity in European countries added to the negative tone, analysts said.
“Surging coronavirus cases and doubts over the next over the next round of fiscal support is triggering a wide range risk averse tone that is sending the dollar higher and sinking gold,” wrote Edward Moya, senior market analyst at Oanda, in a Monday research note.
European equities tumbled Monday, while U.S. stock-index futures pointed to a sharply lower start for Wall Street.
Against that backdrop, the dollar was up 0.6% at 93.444, as measured by the ICE U.S. Dollar DXY, +0.55%, a gauge of the buck against a half-dozen currencies. A stronger dollar can make gold more expensive to overseas buyers using other monetary units.
The decline in bullion on the session also was threatening to push the yellow metal beneath its short-term, 50-day moving average at $1,941.78 an ounce—a move that would be seen as contributing to a view that gold’s bullish short-term trend line was in jeopardy. Market technicians view moving averages as dividing lines between bullish and bearish momentum in an asset.
December gold GCZ20, -1.75% GC00, -1.75% was down $35.20, or 1.8%, at $1,927 an ounce, putting the commodity on the verge of its lowest settlement since July. Gold finished Friday trade by booking a weekly gain of 0.7%.
December silver SIZ20, -3.55% SI00, -3.55% was sliding 82 cents, or 3.1%, at $26.300 an ounce, after last week logging a 1% weekly gain.
