After briefly declining to levels not seen since early July, Gold prices have recovered back above $1800.
Spot gold is currently trading at $1,824.72 per ounce as of 0941 GMT.
Yesterday, Democratic House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin resumed their negotiations on the stimulus measures for the first since the elections. And a bipartisan group of House members and Senators put forward a COVID-19 relief measure amounting to $908 billion. However, Federal Reserve Bank of San Francisco’s president Mary C. Daly and Federal Reserve Bank of Chicago’s president Charles Evans both believed that there was no immediate need for additional fiscal stimulus. But in a recent testimony before the Senate Banking Committee, Federal Reserve Chairman Jerome Powell warned that the American economy is still in a damaged and uncertain condition.
Meanwhile, Senate Majority Leader Mitch McConnell wants to include a coronavirus aid measure to the funding bill being rushed by Congress. The legislature is rushing to pass a $1.4 trillion spending bill by December 11 to keep federal agencies funded and avoid a government shutdown amid the pandemic. Lorie Logan, executive vice president in the Markets Group of the Federal Reserve Bank of New York, commented that the emergency lending programs rolled out to support businesses and individuals impacted by the pandemic could be quickly reinstated if need. The said programs will expire at the end of the year.
According to Axi’s chief global market strategist Stephen Innes, the stimulus talks are positive signs and there is likely to be bipartisan cooperation ahead. But the amount of the stimulus package is well below what the gold market was expecting. IG Markets’ analyst Kyle Rodda added that gold remains supported by negative real yields, which could go down further with the stimulus package.
Another major factor affecting the yellow metal is the plan of U.S. health officials to start the COVID-19 vaccination by mid-December. Pfizer Inc. and BioNTech said they are ready to ship the first doses of the vaccine within hours after approval of emergency use authorization.
In a related development, the holdings in the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, slipped by 0.3% yesterday to 1,191.28 tons.