Gold Retreats As Dollar Gains On U.S. Stimulus Doubts

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October 22, 2020

Gold fell on Thursday as the dollar recovered some lost ground after doubts emerged whether U.S. lawmakers could reach agreement on a new coronavirus aid package before the November presidential election.

Spot gold fell 0.57% to $1,913.56 an ounce by 0606 GMT, off Wednesday’s level of $1,931.01, which was its highest since Oct. 12. U.S. gold futures were down 0.7% at $1,916.60 an ounce.

“Without stimulus, there’s a lot of uncertainty and that’s driving people to be a bit cautious and move towards the U.S. dollar,” said Michael Langford, executive director at corporate advisory and consultancy firm AirGuide.

Stimulus talks between U.S. lawmakers faced a setback on Wednesday when President Donald Trump accused Democrats of being unwilling to craft a compromise on aid.

The news dented risk sentiment and lifted the dollar against its rivals, making gold more expensive for holders of other currencies.

“The Fed is not going to ease anymore, but there’s no scope for tightening and that could put a floor under gold,” said DailyFx currency strategist Ilya Spivak, adding that the metal was unlikely to rally or fall “catastrophically”.

Widely viewed as a hedge against inflation and currency debasement, bullion has gained 26% this year as central banks and governments globally unveiled unprecedented stimulus measures to cushion the economic fallout from the pandemic.

Wall Street bank Goldman Sachs forecast gold at $2,300 an ounce over a 12-month horizon, in a note that said commodities were headed for a “structural” bull market next year.

Fiscal and monetary policy in developed markets continue to drive interest rates low and spur demand for inflation hedges, the bank added.

Investors now await the final U.S. presidential debate between Trump and Democrat rival Joe Biden Thursday night, and weekly U.S. jobless claims due at 1230 GMT.

Elsewhere, silver fell 0.9% to $24.85 per ounce, platinum rose 0.1% to $887.32 and palladium was little changed at $2,403.81.

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

Gold Retreats As Dollar Gains On U.S. Stimulus Doubts

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