On Monday, gold prices edged lower on the uncertain passage of the massive U.S. COVID-19 stimulus package. But a softer dollar capped the losses of the yellow metal. The greenback dropped by 0.1% against a basket of rival currencies that made gold less expensive for investors using other currencies. Another factor that supported gold is the increase in the global number of coronavirus infections to more than 98 million because of vaccination delays.
Spot gold is currently trading at $1,852.44 per ounce as of 0813 GMT.
Yesterday, U.S. President Joe Biden’s administration discussed the proposed $1.9 trillion pandemic relief package with Democratic and Republican lawmakers. They agreed that the topmost priority should be vaccine production and distribution. But some moderate Republican senators think the proposal is too expensive. Sen. Susan Collins, R-Maine, said she supports raising vaccine funds, but it is hard to justify a bill that is so big, especially they have just passed $900 billion of assistance. Sen. Lisa Murkowski, R-Alaska, said the proposal would require a fair amount of debate and consideration. Republican Senators Mitt Romney, Bill Cassidy, and Lindsey Graham also expressed opposition to Biden’s proposal.
Lachlan Shaw, the head of commodity research at National Australia Bank, said the speed and timing of Biden’s stimulus package are now in question. Some Senate Republicans have started expressing their objections to some parts of the relief plan. However, the delays in vaccination favor the passage of another stimulus, he said.
Nicholas Frappel, the global general manager at ABC Bullion, added that the Federal Reserve is likely to be more conservative in tackling the COVID-19 problem because of the negative impact of an aggressive move on economic activity and sales. He expects the bullion to move up back to the $1,870-$1,880 range.
In physical trading, the demand for gold in Singapore and China picked up last week as the Chinese New Year approaches.
In a related development, the holdings of the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, fell by 0.07% on Friday to 1,173.25 tons. Also, market speculators lowered their bullish stance in COMEX gold contracts for the week that ended on January 19.