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Gold futures finished marginally lower and consolidated in a tight range for a third week with investors held back by lack of movement toward a new government fiscal stimulus plan. Price action was choppy with gold rising along with hopes of a falling deal when those hopes were dashed.
It wasn’t the actual stimulus headlines that drove the price action, but what they did to the US dollar. When the stimulus on the dollar weakened, which boosted external demand for the raw material denominated in dollars. When both sides almost walked away from the negotiations, the dollar rose, putting pressure on gold prices.
Last week, December Comex gold closed at $ 1905.20, down $ 1.20 or -0.6%.
Gold is seen as a hedge against inflation and currency degradation driven by stimulus measures.
Stimulus update
There’s no point going back over last week’s stimulus headlines. All you have to know is that they changed almost every day and sometimes twice a day. Unless there is fresh news over the weekend, we think Friday’s comments will set the tone earlier this week.
On Friday, the Speaker of the United States House of Representatives, Nancy Pelosi, said that another round of COVID-19 aid was still possible before the November 3 elections, but that President Donald Trump would have to get them to reluctant Republicans on board if you want a deal.
Meanwhile, Trump and Treasury Secretary Steven Mnuchin responded that Pelosi must compromise to get an aid package, saying significant differences persist between the Republican administration and the Democrats.
So it looks like another stalemate has been reached, but we hope to see more adventures next week.
Traders could shift focus to presidential election
Gold traders are likely to shift their focus to the November 3 U.S. presidential election after President Donald Trump and Democratic challenger Joe Biden offered highly contrasting views on the pandemic in the final presidential debate on Thursday. .
Weekly forecast
Gold could get stuck in a holding pattern in the short term with some uncertainty associated with the election, although the polls seem to be leaning towards a Joe Biden win. Traders also expect a stimulus package by the end of the year, regardless of who wins the election.
In the long term, the market is well supported by accommodative central bank policies. However, in the short term, the market could remain in range until the stimulus package is approved.
