The prices of gold were mostly flat in early day trading today as a result of the Easter Monday holiday. Gold prices had reached a four-week high last Friday. Near-term dips are likely to be supported after the U.S. Federal Reserve’s stimulus package and the lingering fears over the global economic downturn caused by the COVID-19 pandemic.
U.S. gold futures dropped by 1.1% to $1,732.90 an ounce. Spot gold prices, which reached its one-month last Friday, declined by 0.4% to $1,682.65 an ounce as of 0522 GMT.
The Feds announced a $2.3 trillion stimulus measure last Thursday to cushion the American economy from impact of the coronavirus crisis. More than 16.8 million American have already filed for unemployment benefits since the week which ended on March 21.
In the European Union, finance ministers have already agreed on a 500 billion euros worth of support for the economies battered by the coronavirus outbreak. However, the agreement did not include the use of joint debt to help the bloc recover from a steep. The joint debt proposal is supported by Spain, France and Italy but opposed by Austria, Finland, the Netherlands and Germany.
According to IG Markets analyst Kyle Rodda, the profit-taking today reversed the bullion’s gains last Friday which was driven by the Fed’s policy action. He also said that gold remains very well supported in the current environment but is facing a stiff technical resistance pricing at about $1,690.
Stephen Innes, Axicorp’s chief market strategist, added that the Fed’s stimulus measures represent a two-fold benefits for the bullion. He explained that it will not only reduce the cost of investing in gold but will also eventually drag down the valuation of the U.S. dollar.
Meanwhile, global stocks and commodity currencies also slipped because of concerns over the economic damages caused by the COVID-19. There was also a slowdown in major physical bullion hubs due to coronavirus-led restrictions.
In a related development, the holdings of the largest gold-backed exchange-traded fund in the world SPDR Gold Trust grew by 0.6% to 994.19 tons last Thursday. This reflects investors’ continued interest in the precious metal.