Gold and silver fell to one-month lows as the worsening pandemic in Europe hurt sentiment, while investors weighed signs the European Central Bank will increase stimulus this year.

Bullion extended losses made on Wednesday after Germany and France said that they will clamp down on movement for at least a month, coming close to the stringent lockdowns in the spring. With record numbers of new cases seen in Spain, Italy and the U.K., the dollar has rallied as traders shun risk. Gold exchange-traded funds saw their biggest outflows in more than a month, according to an initial tally by Bloomberg.

“This time the fall in price was not viewed as a buying opportunity,” Commerzbank AG analyst Daniel Briesemann wrote in a note. “Only in late trading did gold and co. recover somewhat.”

The traditional haven is heading for a third monthly decline, a run of losses it hasn’t seen since early 2019, although holdings in exchange-traded funds have mostly proved resilient. Investors are now awaiting commentary from the ECB regarding further support for economies. In the U.S., lawmakers are expected to frame a new fiscal aid package after the Nov. 3 election.

“We think there will be ongoing downward pressure on gold prices in the near term as the U.S. dollar finds support from global growth concerns,” said Vivek Dhar, an analyst at Commonwealth Bank of Australia. “There is a high risk of a double-dip recession in the Eurozone because governments are reinstating broad-based lockdown measures to limit the spread of COVID-19.”

Spot gold declined 0.7 per cent at US$1,864.60 an ounce at 1:22 p.m. in London, after falling 1.6 per cent on Wednesday. Silver slumped 2.3 per cent, platinum was 1.7 per cent lower and palladium declined 2.2 per cent. The Bloomberg Dollar Spot Index gained 0.3 per cent after rising 0.6 per cent on Wednesday.

Other events:

• The Bank of Japan kept its key interest rate and asset purchases unchanged, but trimmed its economic forecasts on Thursday.
• The first reading of U.S. third-quarter GDP Thursday is anticipated to be the strongest on record, following a record dive in the prior quarter as many businesses were shuttered by the pandemic.