The prices of gold hit a one-week peak after U.S. President Donald Trump signed the pandemic relief bill into law. The yellow metal was supported further by the weaker dollar, which fell 0.2% against a basket of rival currencies that made the bullion less expensive for investors using other currencies. Gold has gained more than 24% so far this year due to widespread stimulus rolled out to mitigate the economic impact of the pandemic.
Spot gold is currently trading at $1,885.90 per ounce as of 0752 GMT.
Yesterday, Trump signed the $2.3 trillion COVID-19 stimulus bill and spending package that averted a federal government shutdown and restored unemployment benefits to millions of Americans. He backed down from his initial threat to block the bill after intense pressure from both Democratic and Republican lawmakers. Republican officials believe that his decision could help Republican senatorial candidates Kelly Loeffler and David Perdue in the runoff elections in Georgia that would determine control of the Senate.
But Trump still wants to increase the stimulus checks for individual Americans from $600 to $2,000. He said the House of Representatives plans to vote on it on Monday while the Senate will start the process to increase direct stimulus payments. Democrats support the $2,000 payments, but Trump’s own party is opposed to it.
Stephen Innes, Axi’s chief global market strategist, commented that gold is rallying based on the relief bill. The question now is how the market will follow through. He predicted that the precious metal could go above $1,900, but it would depend on the movement of the U.S. dollar.
Meanwhile, Bank of Japan officials are divided on their coronavirus stimulus program and the inflation target. In Europe, governments launched a mass vaccination drive with the goal of having all adults inoculated in 2021. They have secured contracts with Pfizer, Moderna and AstraZeneca for a total of more than two billion doses of COVID-19 vaccines.
On Brexit, Britain has reached a trade deal with the European Union (EU) that preserves zero-quota and zero-tariff access to the EU market. But there will still be disruptions. So, the British government urged businesses to make quick preparations to deal with Brexit because they have less than a week to do so. They need to understand the export and import rules and the special rules that apply to trading with Northern Ireland.