Gold rises on renewed US stimulus hope, dollar falls

Spot gold rose 0.3 percent to $1,910.56 an ounce at 3:37pm, New York time, after falling as much as 0.5 percent.

Gold could appreciate and the dollar could dip in the event that Washington agrees on passing a stimulus package [File: Andrey Rudakov/Bloomberg]
Gold could appreciate and the dollar could dip in the event that Washington agrees on passing a stimulus package [File: Andrey Rudakov/Bloomberg]

Gold rose on renewed optimism for a preelection aid package in the U.S., while the dollar fell to a one-week low.

House Speaker Nancy Pelosi said a bill for a compromise stimulus package is being written as she awaits a key phone call with Treasury Secretary Steven Mnuchin. Senate Majority Leader Mitch McConnell said his chamber would take up a comprehensive coronavirus package if an accord is struck. The Bloomberg Dollar Spot Index headed for the third straight decline.

Pelosi said in a Bloomberg Television interview that while there are areas where more work is required to get a compromise, she was pleased with the Trump administration’s latest position on coronavirus testing and tracing. The two sides are also “in range” on other health care provisions, she said.

“The market will no doubt follow the talks in Washington very closely,” Commerzbank analyst Daniel Briesemann said in a note. “Gold could profit in the event of a deal because the U.S. dollar would presumably be in less demand then and would probably depreciate.”

Spot gold rose 0.3% to $1,910.56 an ounce at 3:37 p.m. New York time after falling as much as 0.5%. Gold futures for December delivery on the Comex rose 0.2% to settle at $1,915.40.

The dollar index dropped as much as 0.4% to the lowest since Oct. 13.

Spot silver climbed 1.5%, while platinum and palladium gained.

The passing of Tuesday’s deadline may have a short-term impact on gold, but “overall the market looks a bit stale, with the outcome and the impact of the U.S. election being an even bigger headache,” according to Ole Hansen, head of commodity strategy at Saxo Bank A/S.

The price of the metal held in a narrow range this month amid the fraught Washington talks with investors waiting on the result of the election to provide direction. A Democrat victory should spur a rally for gold on bets for a larger stimulus for the economy, Phillip Futures Pte. said Tuesday in a note.

Talks between Britain and the European Union over a post-Brexit trade deal are mired in a stalemate after a call between the two sides’ chief negotiators concluded without a breakthrough.

Source : Bloomberg

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