The prices of gold eased on Thursday because of a firm dollar and U.S. Treasury Secretary Steve Mnuchin’s comments that Congress is not likely to pass the new coronavirus stimulus measures before the November presidential election. He said he and House Speaker Nancy Pelosi were “far apart” on the provisions of the fiscal stimulus package.
The U.S. dollar rose 0.1% against a basket of rival currencies supported by the lack of progress on the stimulus measures and the rising number of COVID-19 infections.
Spot gold is currently trading at $1,901.07 per ounce as of 0811 GMT.
Refinitiv Metals Research’s manager of precious metals research Cameron Alexander commented that the gold market was waiting for more clarity on the U.S. stimulus package and predicted that the bullion would rise again when the details become available. OANDA’s senior market analyst Jeffrey Halley added that bullion is likely to be priced between $1,88 and $1,920 in the near-term but should recover after the election and resume its rally until the end of the year.
Despite the temporary setback, the yellow metal remains supported by the uncertainty due to the COVID-19 pandemic. The recent surge in coronavirus infection in Europe has forced some countries to close schools, enlist student medics and cancel scheduled surgeries. Poland, Russia and Italy reported their highest daily tallies of new COVID-19 cases yesterday. Russia has already declared a public health state of emergency.
Compounding the pandemic uncertainties is the news that two American pharmaceutical companies paused their COVID-19 drug trials because of safety concerns. Johnson & Johnson temporarily stopped all its clinical trials after one of the patients developed an “adverse reaction.”
Eli Lilly and Company, which is developing an antibody treatment touted by President Donald Trump as a “cure” for COVID-19, voluntarily halted its trials after drug inspectors found serious quality problems at its pharmaceutical plant in Branchburg, New Jersey. The findings resulted in an “Official Action Indicated” notice from the Food and Drug Administration (FDA).
Meanwhile, Metals Focus estimated that gold mines around the world would produce only 3,368 tons this year. It is 4.6% lower compared to last year and is the smallest since 2015. But production will increase by 8.8% next year to a record high of 3,664 tons. Head of mine Adam Webb also said the demand for the yellow metal will decline by a total of 25% this year but will recover 17% next year.