The prices of gold rose on Wednesday despite President Donald Trump’s threat not to sign the COVID-19 stimulus bill. The yellow metal was supported by the weaker U.S. dollar, which fell 0.1% against a basket of rival currencies and made the bullion less expensive for investors using other currencies.
Spot gold is currently trading at $1,868.67 per ounce as of 0848 GMT.
The U.S. Congress has passed the $900-billion COVID-19 relief bill. But in a video tweet last night, Trump threatened not to sign the legislation. He said the direct payment of $600 for individual American was “ridiculously low” and he wants to increase to $2,000 or $4,000 for couples. Trump also wants Congress to remove the unnecessary items from the bill.
Michael Langford, the corporate advisory director at AirGuide, predicted gold prices to be low in the coming weeks. It is because the precious metal has been priced based on the U.S. stimulus deal and pandemic-related uncertainty. He also expects de-risking among fund managers and greater flows of investments towards exchange-traded funds.
But Kyle Rodda, an analyst at IG Market, contended that gold might make another push towards $2,000 an ounce in 2021. He explained that the bullion would recover its historically negative relationship with real yields, and yields will likely be on a downward trend at the start of the new year.
Meanwhile, the U.S. Department of Commerce reported a record pace of economic growth in the third quarter and plans to revise its GDP estimate. However, consumer confidence declined for the second consecutive month in December and existing home sales fell more than expected in November.
The Conference Board reported that the consumer confidence index dropped to 88.6, the lowest since the 92.9 in August. Economists forecasted an increase to 97.0. This decline was due to renewed business restrictions and a deterioration in the labor market. It also indicates a slowdown in economic recovery from the pandemic.
The National Association of Realtors reported that existing home sales fell 2.5% to 6.69 million units last month. Experts predicted only a 1.0% decline to 6.70 million units. In November, retail sales and jobs growth also decreased, while unemployment claims increased.
In a related development, the holdings in the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, fell by 0.20% yesterday to 1,167.53 tons.