Strong Dollar Pressures Gold

Strong Dollar Pressures Gold

Strong dollar pressures gold this morning, but doubts about the imminent U.S. presidential election and concerns over the COVID spike in the U.S. and Europe have limited the bullion’s losses. Meanwhile, U.S. Stock Markets are under pressure this morning, with the Dow down over 400 at the opening bell.

The yellow metal had gained just $6.70 in the first two days of the week after slipping $1.20 an ounce last week amid swinging sentiment over the likelihood of a multitrillion-dollar U.S. stimulus package. The dollar strengthened Wednesday as hopes of a package faded.

Gold futures rose 0.3% Tuesday, with the December contract settling at $1,911.90 an ounce on Comex. 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. Before this morning’s drop, it had advanced 0.9% in October. Currently, the December contract is $1,880.10 an ounce while the DG spot price is $1,882.00.

China’s net gold imports via Hong Kong climbed to the highest level in six months in September, Reuters reported, citing a recovery in demand as economic activity picked up. China is the world’s largest consumer of the metal.

Investors will be closely watching the final few days the U.S. presidential election campaign, the stimulus standoff, the state of the pandemic and central bank statements from around the world for further direction.

U.S. President Donald Trump said Tuesday that a relief package will likely come after the Nov. 3 election. The White House and House Democrats have remained far apart in negotiations over the deal and Senate Majority Leader Mitch McConnell — a Republican — has said the Senate won’t consider any stimulus legislation before the election.

The Bank of Canada will announce a rate decision and offer guidance Wednesday, followed by the Bank of Japan and European Central Bank on Thursday. Economic indicators to watch for include U.S. third-quarter U.S. GDP and initial jobless claims on Thursday. Pandemic-related lockdowns have sent millions of Americans into unemployment.

The virus known as COVID-19 has killed almost 1.17 million people worldwide and sickened 43.9 million. About 20% of the cases — and 19% of the deaths — are in the U.S. The country has 8.77 million cases, more than any other nation.

Silver futures increased 0.6% Tuesday to settle at $24.57 an ounce on Comex. The December contract fell 0.4% in the first two days of the week. The most active contract is up 4.6% this month after plunging 18% in September, gaining 18% in August and soaring 30% in July. The December contract is currently $23.505 an ounce while the DG spot price is $23.47.

Spot palladium fell 0.6% Tuesday to $2,353.80 an ounce and has dropped 1.2% so far this week. Spot platinum advanced 1.7% Tuesday to $892.70 an ounce but is down 2.1% in the first two days of the week. The DG spot price for platinum is currently down over $25 an ounce to $864.60, while palladium is down to $2,260.80.


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