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The precious metal is again trading above the key level of $1,800. It took gold two weeks to reach the high. A sharp drop in the greenback also triggered an increase in the price of gold.
Yesterday, the US dollar index lost 0.5%. In this light, gold that is in an inverse relationship with the US dollar skyrocketed.
On Monday, the quote spiked by 1.3%, or $22.30. As a result, the precious metal broke the $1,800 barrier. The last time the quote traded at this level was on August 6. The price closed at $1,806.30 at the end of the trading day.
Gold has been bullish for two consecutive sessions. Last Friday, the price was up by 0.05% due to a stronger US dollar.
In general, the precious metal strengthened during the course of the previous trading week. It gained 0.3% amid uncertainty over Afghanistan's future and the rapid spread of the coronavirus worldwide.
These two factors provided support to gold at the beginning of the new trading week. Due to a growing number of new Delta infections, risk appetite decreased. A rapid spread of the new COVID-19 variant poses a threat to the global economic recovery. At the same time, demand for safe-haven assets like gold increased.
Notably, a weaker greenback boosted the price of gold on Monday. The US currency was bullish in the previous week after the release of the dovish FOMC Minutes. However, at the beginning of this week, the greenback went down.
The US dollar reversed ahead of the upcoming symposium in Jackson Hole scheduled for August 26-28. The Fed's Chair Jerome Powell is expected to comment on the possibility of tapering during the event.
Many analysts are inclined to believe that the regulator will continue its dovish monetary policy amid growing coronavirus concerns. In such a case, the greenback may drop. Conversely, gold will rise in value.
The precious metal is expected to stay above $1,800 in the short term. Uncertainty about the future of early tapering by the Federal Reserve will be the key factor providing support to gold.
Meanwhile, a correction started today. At the moment of writing, the precious metal lost 0.11%, or $1.95, and traded at $1,804.35.
Silver also tumbled. On Tuesday, the asset fell by 0.23% to $23.602 compared to its previous close when the price increased by 2.4%. Other popular precious metals were bullish yesterday as well.
Copper climbed 2.4% to $4.24. Platinum gained 2% and traded at $1,014.10. At the same time, palladium spiked 4.8% to $2,385.10 on August 23. The asset recouped its losses for five trading days.
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