Gold slid from a three-week high as the dollar regained some of its losses after a new US coronavirus aid package ran into resistance. Spot gold lost 0.1% to trade at $1,927.11 per ounce by 0629 GMT. The drop came after hitting its highest level since September 21 at $1,932.96 earlier in the session. The US gold futures gained 0.5% to trade at $1,934.70 per ounce.
One analyst, Margaret Yang, said:
“The dollar index has rebounded slightly, weighing on the precious metal. The technical trend has turned bullish in the near term, and very soon, it may test the key resistance level of $1,942.”
The dollar index steadied, and at some point, it was trading below a 3-week low against the rivals after negotiations on the United States stimulus package ran into resistance, and the Yuan dropped after China’s central bank took a measure seen as aimed at limiting its strength.
On October 11, the Trump administration urged Congress to pass a stripped-down coronavirus relief bill using leftover funds from an expired small business loan program.
However, while the $1.8 trillion economic stimulus proposal attracted criticism from congressional Republicans and Democrats, investors appeared optimistic that spending will resume at some point. Stephen Innes, the chief global market strategist at Axi, said:
“There is going to be a stimulus coming quickly after the election… The market will look through the fact that we don’t have stimulus now but that it is coming and that will be supportive for gold.”
Gold is considered a hedge against currency debasement and inflation. So far, in 2020, the precious metal has gained more than 27%, boosted by unprecedented stimulus measures introduced worldwide to cushion the economic fallout from the current health crisis.
On its part, silver surged by almost 1% to trade at $25.36 per ounce while palladium fell 0.1% to $2,437.79. Platinum gained 0.2% to trade at $887.57.