Gold erased losses as a slumping dollar and widening lockdowns to curtail the coronavirus bolstered demand for the metal as a haven.

Bullion fell as much as 0.9 per cent earlier after Pfizer Inc. said it plans to apply for the first U.S. regulatory authorization for a coronavirus shot within days. Gold investors took advantage of the price decline, buying as the greenback extended losses and expectations mounted for further virus lockdowns.

The new Pfizer announcement “triggered a couple of waves of liquidation in gold to session lows, but buy programs are pushing it back up,” said Tai Wong, head of metal derivatives trading at BMO Capital Markets. “Gold seems to have found short-term equilibrium.”

Spot gold rose less than 0.1 per cent to US$1,880.70 an ounce at 11:59 a.m. in New York.

The US$1,895-US$1,900 range is becoming an important short-term hurdle for gold, Wong said.

Even with effective vaccines in the pipeline, the U.S. faces an uphill battle to bring the pandemic under control. While states including California and Illinois have extended restrictions to combat rising case numbers. Expectations that governments and central banks will step up stimulus to help economies are also underpinning the metal.

“There’s a lot of reasons not to be selling gold here,” Peter Thomas, senior vice president at Zaner Group, said by phone.

Still, gold holdings in exchange-traded funds, a key driver of the metals rally to a record this year, have dropped more than 30 tons this month, a sign investor confidence may be dwindling.