By Adam Claringbull
Investing.com - Gold was down on Tuesday morning in Asia as the U.S. dollar rose, however, its fall was lessened by the continuing COVID-19 uncertainty.
Gold futures edged down 0.14% to $1,931.45 by 12:37 AM ET (5:37 AM GMT) after a peak of $1,945.90 the previous day and looked likely to continue falling.
The fall appears to be due to the stronger dollar, which rose as traders anticipate the European Central Bank’s latest policy decisions, due Thursday, and digested heightened concerns over the pound due to new Brexit uncertainties after a combative statement from U.K. Prime Minister Boris Johnson.
The ongoing major contraction in the Japanese economy, with the GDP contracting 28.1% year-on-year during the second quarter, is helping to support gold, as are Germany’s much lower than anticipated industrial output data. The latter suggests that Germany, and in tandem, Europe, may be facing a much less-rapid recovery from the COVID-19 crisis than previously anticipated.
While the U.S. Labor Day holiday slowed trade in the precious metal, U.S. President Donald Trump continued to create uncertainty in the marketplace by once again raising the concept of decoupling the U.S. and Chinese economies as a solution to the U.S.’ massive trade deficit with China. Whether this idea is to be seriously considered in the future remains to be seen, though markets showed little reaction.
Gold, a safe-haven popular during times of social and economic uncertainty, has seen substantial price increases since the onset of the COVID-19 pandemic with prices topping out above $2,072 in August.