Gold prices on Tuesday were rising, adding to the precious metal’s climb to the highest levels since early November, amid rising concerns about the spread of COVID-19 and concerns about the balance of power in Washington after key elections take place in Georgia.
“After looking like a wounded animal for much of the final months of the year, gold has started 2021 in fine fashion, bursting through $1,900 on Monday and pushing $1,950 once again today,” wrote Craig Erlam, senior market analyst at Oanda, in a daily research note.
Renewed implementation of lockdown measures in the U.K, E.U. and U.S. in particular to limit the spread of the coronavirus has caused some consternation on Wall Street and, perhaps, bolstered appetite for bullion.
The highly transmissible strain of COVID-19 recently discovered in the U.K. has also been found in New York, the state’s governor said Monday, and London announced a stricter national lockdown, even as vaccines are being rolled out in many parts of the world.
Meanwhile, investors are closely watching a runoff election for two U.S. Senate seats in Georgia on Tuesday. If Democrats win both seats, that could make it easier for President-elect Joe Biden’s administration to pass legislation that could influence trading in stocks, including the repeal of corporate tax cuts put in place under the Trump administration.
Worries about the political landscape in the U.S. were also linked to rattle the stock market on Monday.
“Adding to the cautious start to the year in the US is today’s Senate runoff elections in Georgia, with the result having massive implications for the country over the coming years,” wrote Erlam.
Against that backdrop, gold for February delivery was trading $4.20, or 0.2%, higher at $1,950.80 an ounce, following a 2.7% gain on Monday that took bullion to its highest level since early November, according to FactSet data.
“The Republican’s only need one seat to retain their majority with a double Democrat victory giving them a de facto majority, given the casting vote of the vice President [Kamala Harris],” wrote the Oanda strategist.
Silver futures for March delivery, meanwhile, rose 16 cents, or 1.2%, to trade at $27.53 an ounce, following a 3.6% gain for gold’s sister metal to start 2021.
A soft start for greenback, after its steepest annual slide since 2017, also was helping to buttress gold and silver prices. The ICE U.S. Dollar Index was off 0.1% on Tuesday at around 89.763, hanging around its lowest level since the spring of 2018. A weaker dollar can make gold more attractive to overseas buyers.