Gold rises on stimulus hopes and dollar weakness. Early Wednesday optimism that U.S. lawmakers will reach an agreement on a multitrillion-dollar stimulus package sent the dollar to a one-month low.
Gold received an additional bump from this morning’s call issued by Fed Reserve Governor Lael Brainard for more fiscal support from Congress. She says large parts of the economy are still lagging, citing: slowing recovery in the jobs market after the loss of 21 million positions in the early days of the pandemic, on-going struggle for small businesses and an expected decrease in household spending as previous fiscal aid ends.
House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin, who is negotiating for the White House, indicated Tuesday that a deal could be reached before the election on Nov. 3. There is a stumbling block however, the Senate must ratify any agreement and The Washington Post reports that Senate Majority Leader Mitch McConnell told colleagues at a closed-door Senate lunch that he has warned the White House not to finalize an agreement before the election.
Stimulus packages are typically bullish for gold, and the prospect of an agreement also pressured the dollar, another spur for the yellow metal. Pelosi has been pushing for a $2.2 trillion-dollar deal, while the White House has come up to $1.88 trillion.
Gold futures rose 0.2% Tuesday to settle at $1,915.40 an ounce on Comex, their highest close in more than a week. The December contract gained 0.5% in the first two days of the week. The yellow metal is up almost $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 up over $13 to $1,928.60 an ounce, while the DG spot price is $1,925.80.
Gold demand from Western investors has overtaken that from Asian jewelry buyers since the pandemic began, Reuters reported, citing data on Swiss gold exports in September. Switzerland sent less bullion to China and India, but imported record volumes from Hong Kong and sent metal to the U.K.
Uncertainty over the economy, the upcoming U.S. presidential election and Brexit talks have put a floor under prices, making gold a more attractive hedge investment. Pandemic-related lockdowns have sent millions of Americans into unemployment.
The virus known as COVID-19 has killed more than 1.12 million people worldwide and sickened 40.7 million. About 20% of the cases — and 20% of the deaths — are in the U.S. The country has 8.27 million cases, more than any other nation.
Investors will be looking to stimulus talks and comments scheduled for Wednesday from Federal Reserve policy makers for further direction. They are also awaiting weekly U.S. initial jobless claims on Thursday and a presidential debate between President Donald Trump and former Vice President Joe Biden that evening.
Silver futures increased 1.1% Tuesday to settle at $24.98 an ounce on Comex. The December contract gained 2.4% in the first two days of the week. The most active contract is up 6.3% this month after plunging 18% in September, gaining 18% in August and soaring 30% in July. The December contract is currently up $0.27 to $25.250 an ounce, while the DG spot price is $25.17.
Spot palladium rose 2.4% Tuesday to $2,420.40 an ounce and gained 3.4% in the first two days of the week. Spot platinum advanced 2.3% Tuesday to $887.50 an ounce and rallied 1.9% in the first two days of the week. DG spot price for palladium is currently up a tad to $2,420.20 an ounce, while platinum is up over $15 to $897.80.
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