The prices of gold rose by more than 1% on Monday to hit an 8-week peak due to a surge in new COVID-19 cases and the possibility of tougher lockdown measures. British Prime Minister Boris Johnson hinted at tighter restrictions to control the spread of the coronavirus, while Japan is considering declaring a state of emergency in Tokyo and surrounding cities. The yellow metal was also supported by the weak U.S. dollar that made the bullion less expensive and more attractive to investors using other currencies.

Spot gold is currently trading at $1,931.32 per ounce as of 0823 GMT.

A business survey found a slowdown in industrial production in China, which raised concerns about global economic recovery. Factory activity increased, but rising cost pressured hindered the pace of expansion. The Caixin/Markit Manufacturing Purchasing Manager’s Index (PMI) fell from 54.9 in November to 53.0 in December. The December PMIs in the U.S., UK, Germany, France and the European Union will be released later today.

Dominic Schnider, the head of commodities and APAC forex at Hong Kong-based UBS Wealth Management, noted that gold remains supported by weak macro data, particularly December PMIs. He explained that the COVID-19 pandemic continues to ravage the economies of the U.S. and Europe. A return to normal would require a loose monetary policy that would still make gold more attractive as an insurance asset, he added.

The Republican-controlled U.S. Senate blocked the efforts of Democrats and President Donald Trump to raise COVID-19 relief checks from $600 to $2,000.

Meanwhile, market participants will be monitoring the release of the minutes of the latest meeting of the Federal Reserve and the outcome of the runoff elections in Georgia. The result of the election will determine control of the Senate and the fate of President-elect Joe Biden’s legislative agenda. A victory by incumbent Republican Senators Kelly Loeffler and David Perdue will give their party a narrow majority. But a Democratic win will produce a 50-50 split that will give Vice President-elect Kamala Harris the tiebreaker vote.

On the COVID-19, the British government plans to roll out the vaccine from AstraZeneca and Oxford University. In the U.S, government officials want to cut the doses of the Moderna vaccine to speed up the immunization rate.

In physical trading, the demand for gold remained weak in major Asian markets during the holidays.

In a related development, the holdings of the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, rose by 0.08% last Thursday to 1,170.74 tons.