The prices of gold plunged to its lowest level in six weeks as the U.S. dollar reached its eight-week peak. The yellow metal was also pushed down by investors’ concerns over further stimulus measures from the U.S. Federal Reserve.

Spot gold is currently trading at $1,871.93 per ounce as of 14:14 GMT.

The greenback was lifted by concerns about the second wave of COVID-19 infections in Europe and strong home sales in the U.S. Several countries in Europe including Greece, Denmark and France, have implemented new restrictions to control the spread of the virus. In the UK, Prime Minister Boris Johnson imposed a new set of curbs for six months to tackle the second wave of infections. But he warned that additional measures could come if COVID-19 is not suppressed.

The dollar was boosted by the increase in U.S. home sales to their highest level in almost 14 years. The growth in housing demand was fueled by pandemic-induced migration of low-density areas and record-low mortgage rates. A stronger dollar makes gold more expensive for investors using rival currencies.

OCBC Bank economist Howie Lee noted that a risk-off environment is starting to affect the market and the continued strengthening of the dollar is putting pressure on near-term gold prices. Kyle Rodda of IG Markets added that there is some pessimism about the impact of the U.S. stimulus measures on inflation.

One factor that favors gold is the renewed tensions between the U.S. and China. At the 75th annual United Nations (UN) General Assembly, U.S. President Donald Trump said China should be held accountable for spreading the COVID-19. China’s UN Ambassador Zhang Jun rejected Trump’s accusations as baseless and accused him of abusing the UN platform to provoke a confrontation.

Another factor is the comments from the Federal Reserve Bank of Chicago President Charles Evans. He said that if policymakers fail to pass the second round of stimulus measures, then the U.S. could suffer slower economic recovery and recessionary dynamics.

In a related development, the holdings of the largest gold-backed exchange-traded fund in the world SPDR Gold Trust dropped to 1,278.23 tons yesterday