Gold prices drifted lower as the greenback gained some strength at Asia’s trading session. The deadlocked U.S. COVID-19 stimulus deal kept the safe-haven currency, thereby supporting the U.S dollar index.
Gold futures at the time of writing was down 0.23% to trade at $1,903/ounce.
The yellow metal is falling on the bias that the greenback is strengthening, as global investors look to the U.S dollar against the increasing likelihood of no stimulus deal before the contested U.S election scheduled to hold in a few weeks’ time.
Treasury Secretary, Steven Mnuchin, had this to say: “The clock will not stop … I’d say, at this point, getting something done before the election and executing on that would be difficult, just given where we are in the level of details, but we’re going to try to continue to work through these issues.”
A surge in new COVID cases, specifically in the Northern Hemisphere, is also pushing the greenback up, with new restrictions coming into play.
In an explanatory note to Nairametrics, Stephen Innes, Chief Global Market Strategist at Axi, spoke on the prevailing macro at the precious metal market. He said, “There was not very much to direct gold prices initially. After falling below $1890 in Asia, gold began a long but uninspiring trek by grinding higher in Europe. Gold looks to be susceptible to market risk vagaries and a weaker Euro. But the economic climate and the anticipated US stimulus is gold supportive. I think the US election and fiscal stimulus developments could be a more significant driver of price action over the next few weeks, and I feel the big gold shops prefer to trade the yellow metal from the long side. But as is so often the case, gold traders are a bit cautious about jumping back in the saddle after a sharp move lower. It looks to be fast money hitting both the tops and bottoms.”
So far, there has been extraordinarily little real money involvement otherwise.