Gold Retreats – Dollar Rises

Gold Retreats - Dollar Rises

Gold retreats early Monday, coming off a three-week high, as the dollar rises and the White House and House Democrats remain far apart over terms of a multitrillion-dollar stimulus bill to provide relief to segments of the economy hard hit by the coronavirus and associated lockdowns.

Gold futures rose 1% last week to settle at $1,926.20 an ounce on Comex. The December contract gained 1.6% Friday. The yellow metal lost 4.2% in September. Gold is up more than $400 — or 26% — so far this year as investors have flocked to gold because of uncertainty from the coronavirus pandemic and the economy. Currently, the December contract is $1,929.20 an ounce, while the DG spot price is $1,922.40.

Speculators increased their bullish positions in Comex gold contracts in the week through Oct. 6, according to the weekly Commitments of Traders report released Friday by the U.S. Commodities Futures Trading Commission.

In its latest sally in the stimulus talks, the Trump administration pushed Sunday for lawmakers to pass legislation redirecting about $130 billion in unused funding from the Paycheck Protection Program intended for small businesses before taking up the larger stimulus measure.. The president halted and then resumed stimulus negotiations last week. Stimulus actions are typically considered bullish for gold.

Uncertainty over the economy, the upcoming U.S. presidential election and U.S. President Donald Trump’s prognosis after he was diagnosed with COVID-19 a week and a half ago put a floor under prices, making gold a more attractive hedge investment.

The virus has killed 1.08 million people worldwide and sickened 37.4 million. About 21% of the cases — and 20% of the deaths — are in the U.S. The country has 7.76 million cases, more than any other nation. Pandemic-related lockdowns have sent millions of Americans into unemployment.

The International Monetary Fund and the World Bank will hold their annual meetings this week and are expected to give investors a better glimpse of the state of the global economy. The organizations are also expected to call for debt payments by Third World countries to be frozen.

Silver futures advanced 4.5% last week to settle at $25.11 an ounce on Comex. The December contract increased 5.2% Friday. The most active contract plunged 18% in September after gaining 18% in August and soaring 30% in July. The December contract is $25.190 an ounce currently, while the DG spot price is $25.00.

Spot palladium increased 6.1% last week to $2,468.50 an ounce and gained 2.3% Friday. Spot platinum rallied 0.6% last week to $894.10 an ounce and rose 2.9% Friday. The DG spot price for platinum is currently $885.50 an ounce, while palladium is $2,455.10.


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