Gold was steady in Asia after a rapid rise overnight in commodities. A falling dollar and a volatile stock market situation set the stage for the initial rise of the precious metal.
Thursday’s report showed Gold futures inched up 0.06% to $1,956 by 12:05 AM ET (5:05 AM GMT).
A rally in U.S. tech stocks boosted the yellow metal’s rise during the previous session. It pulled up from a low of $1,927.20 to an overnight high of $1,959.35.
The dollar fell due to increased gains in the euro. That was after the European Central Bank (ECB) expressed confidence in the E.U.’s recovery outlook. This adds impetus to gold’s rise.
The ECB is due to meet later in the day and hand down its rate decision. However, Asian markets showed only slight gains in morning trade and the U.S. rally had already been priced in.
In energy commodities, oil fell in morning trade, with Brent crude oil losing ground gained during earlier trading. This was on reports of a rising U.S. crude inventory.
In Europe, the U.K. has caused disruption in the Brexit process. This is with a possible attempt to rewrite the terms of the country’s exit deal. Also, this appears to be a contravention of international law.
In the forex market, the pound accordingly slumped to a six-week low on fears of a no-deal scenario.
A Safe-haven Popular during Social & Economic Uncertainty
Gold is a safe-haven during times of social and economic uncertainty. Since the onset of COVID-19, gold has seen substantial price increases with prices topping out above $2,072 in August.
The continued global rise in coronavirus cases continues to fuel general uncertainty regarding the economic outlook for the foreseeable future. According to Johns Hopkins University data, there are almost 28 million COVID-19 cases worldwide as of September 10.
Meanwhile, the silver price has rallied strongly over the last five months. It rose from March lows to a seven-year high in August.
The silver price trend, as with the gold market, has been driven higher in 2020 by central bank policies. These policies favoured low interest rates and a weaker US dollar, as countries deal with the fallout from the pandemic.
The dollar has fallen to a two-year low against a basket of major currencies, giving further support for commodities prices. These include precious metals to rise.
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