Picture used for illustrative purpose. File

Gold prices surged to an all-time high on Monday as fears about the economic fallout from rising COVID-19 cases boosted demand for the safe-haven metal, although gains were capped by an uptick in the US dollar.

Spot gold was steady at $1,974.29 per ounce by 0508 GMT, after hitting a record high of $1,984.66 in early Asian trade. US gold futures rose 0.3% to $1,992.20.

"The sentiment across markets is deteriorating. First of all, rising infection rates are a real concern for the globe and a real support for gold prices. Given that, it is also driving US dollar higher," said Michael McCarthy, chief strategist at CMC Markets.

Coronavirus cases continued to surge in the United States and stood at over 17.96 million globally.

Rising COVID-19 cases and simmering US-China tensions have dented hopes for a swift economic recovery, driving inflows into safe-haven assets such as gold, which climbed 30% so far this year. 

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"Gold also saw safe-haven demand as the federal unemployment bonus expired on Friday, which would affect US consumer income and spending and the US Central Bank would thus remain dovish," Phillip Futures analysts said in a note.

US lawmakers struggled to hammer out a new stimulus plan. White House Chief of Staff Mark Meadows said on Sunday he was not optimistic on near-term deal for coronavirus relief bill.

Limiting gold's advance, the dollar index rose 0.3%, having touched its lowest level since May 2018 last week. A weaker dollar, also considered a rival safe haven, makes gold cheaper for holders of others currencies.

China's factory activity expanded at the fastest pace in nearly a decade in July, a survey showed.

Spot gold may retreat into a range of $1,943-$1,954 per ounce, said Reuters technical analyst Wang Tao.

Elsewhere, silver eased 0.1% to $24.36 per ounce, platinum fell 0.8% to $899.79 and palladium dropped 0.8% to $2,075.02.

Reuters