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Gold is supported by weaker U.S. dollar, geopolitical tensions — Commerzbank

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(Kitco News) Gold continues to trade above the $1,800 an ounce level as prices see support from weaker U.S. dollar and rising geopolitical tensions, says Commerzbank. “Gold was lent support by a weaker U.S. dollar. Apparently the U.S. currency is no longer profiting from the rising numbers of new corona infections in the U.S., which was strange enough in any case. Instead, the foreign exchange market appears to be adopting a more realistic view of the impact of the corona pandemic,” writes Commerzbank analyst Carsten Fritsch. The U.S. economic recovery might be slower than in other coteries due to the rising coronavirus cases nationally, Fritsch notes. “Recently, the U.S. even overtook Brazil in terms of the number of new cases per 100,000 inhabitants,” he says. “The economic recovery is therefore likely to be sluggish despite the positive U.S. economic data and rising U.S. stock markets of late.” On the geopolitical front, tensions continue to heat up between the U.S. and China, with Hong Kong stuck in the middle. “Gold is also finding support from the geopolitical tensions that continue to simmer. U.S. President Trump has signed a decree that ends Hong Kong’s special status. What is more, he has signed a bill that allows sanctions to be imposed on Chinese individuals who are responsible for suppressing the political opposition in Hong Kong,” Fritsch points out. “The dispute between the US and China over territorial sovereignty and sea routes in the South China Sea is also continuing. Gold is likely to remain in demand in this environment, as the ongoing interest in gold ETFs indicates.”

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