The prices of gold remained close to the psychological price level of $1,900 an ounce on Monday. The stronger dollar pulled down bullion prices, but its impact was offset by U.S. House Speaker Nancy Pelosi’s statement on the coronavirus relief package.
Spot gold is currently trading at $1,910.67 per ounce as of 0851 GMT.
The dollar maintained its value against a basket of rival currencies because of uncertainties surrounding the forthcoming U.S. presidential.
Yesterday, Pelosi acknowledged that the differences between the Democrats and the administration on the COVID-19 relief measures remain unresolved, but she is optimistic that the bill could be passed before the election. But for that to happen, Pelosi said the agreement should be reached within 48 hours. The problem is, Treasury Secretary Steve Mnuchin, her Republican counterpart at the negotiating table, will be in the Middle East until Tuesday.
OCBC Bank’s economist Howie Lee commented that the yellow metal would trade at the $1,900.00/oz level while the market waits for what will happen to the fiscal stimulus in the next 48 hours. AxiCorp’s chief global market strategist added that big gold buyers would continue to purchase the bullion because they know that it will maintain or even increase its value because of the U.S. stimulus measures.
Aside from the U.S. stimulus package, there are other economic and political factors supporting gold. The number of new COVID-19 cases reached a daily increase of 400,000 last Friday and forced several European countries to impose new restrictions to control the outbreak. Harshal Barot of Metals Focus said it could result in an extended economic slowdown and a double-dip recession in Europe.
In China, the gross domestic product (GDP) growth in the third quarter missed analysts’ expectations of 5.2% and rose only by 4.9%.
In physical trading, Indian gold dealers continued stocking up inventory in preparation for the anticipated increase in sales during the festival season. But in China, the celebration of the Golden Week failed to lift the demand for the yellow metal.
In a related development, the holdings of the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, dropped by 0.27% last Friday to 1,272.56 tons. Also, market speculators lowered their bullish stance in COMEX gold contracts for the week that ended on October 13.