Gold edged higher as Treasury yields continued to decline even as stock markets found their feet after falling sharply on fears over the delta variant.

U.S. stock-index futures and European equities gained as markets stabilized following Monday’s rout, which saw the S&P 500 fall the most in two months. Meanwhile Treasuries continued a rally that sent the ten-year benchmark rate below 1.2 per cent.

New waves of COVID-19 are challenging previous optimistic assumptions about the pace of the global economic recovery, giving investors a reason to think about havens like gold. The U.S. on Monday warned citizens against travel to the U.K. and Indonesia, while hospitalizations in Texas rose the most since April and Southeast Asia reels from a wave of infections.

Anything which forces central banks to prolong their stimulus will be welcomed by gold. In June the metal endured its worst month since 2016 after the Federal Reserve brought forward its forecast rate hikes amid fears about inflation. Data last week showed prices paid by U.S. consumers rose the most in more than a decade.

“While upside inflation prints may be giving fuel to the monetary hawks, rising COVID cases may deter the central bank from pressing the brakes prematurely,” Nitesh Shah, director of research at WisdomTree. “Even talking about pressing the brakes may become taboo in this heightened period of investor sensitivity to the Fed’s forward guidance.”

U.S. jobs data released on Thursday will be keenly watched by investors trying to gauge the state of the economic recovery.

Spot gold was 0.3 per cent higher at US$1818.38 an ounce by 1:01 p.m. in London. Silver steadied, while platinum and palladium gained. The Bloomberg Dollar Spot index strengthened was little changed.