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Gold dips as dollar recovers, US stimulus doubts

Thu Oct 22 2020

 

Gold edged lower on Thursday as the dollar recovered from a seven-week trough and some concerns emerged that an agreement on a new U.S. fiscal coronavirus aid package will not be reached until after the presidential election.

 

FUNDAMENTALS

Spot gold fell 0.2% to $1,920.86 per ounce by 0123 GMT, retreating from a more than one-week high of $1,931.01 hit in the previous session.

 

U.S. gold futures were down 0.3% to $1,924.30 per ounce.

 

Stimulus talks between U.S. lawmakers faced a setback on Wednesday when President Donald Trump accused the Democrats of being unwilling to craft a compromise on aid, despite reports of some progress earlier in the day.

 

The economic recovery is uneven and uncertain and will require continued support to ensure it becomes broad-based and sustainable, U.S. Federal Reserve Governor Lael Brainard said on Wednesday, emphasising the need for additional fiscal support.

 

Gold is considered a hedge against inflation and currency debasement.

 

The dollar index steadied after hitting a seven-week low, dimming bullion's appeal for other currency holders.

 

Britain will resume talks with the European Union on Thursday, marking a new push by the two sides to protect billions of dollars worth of trade from the beginning of next year.

 

Gold could touch new highs next year, even as its record-breaking rally slows to average less than $2,000 dollars an ounce, a Reuters poll showed.

 

Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, fell 0.1% to 1,269.35 tonnes on Wednesday from 1,269.93 tonnes on Tuesday.

 

Silver fell 0.4% to $24.96 per ounce, while platinum rose 0.2% to $887.74 and palladium was up 0.1% at $2,406.28.

 

Source: Reuters