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Original Caption: Trump Just Tweeted! Fiscal Stimulus Prospects Uncertain, Gold Shocks Fall
FX168 Financial News (North America) News YellowGold priceOn Tuesday (October 6), the price of gold remained almost flat after the price of gold rose the day before due to the weakening of the US dollar, as investors were paying close attention to the prospect of more stimulus measures introduced by the US government.
In the US market, spot gold fell slightly, trading at $ 1,911.80 an ounce, and remained tight within the US $ 15 range.
(30 Minute Gold Spot Chart, Source: FX168)
Measured by the Intercontinental Exchange’s DXY dollar index, the dollar fell on Monday and fell 0.1% on Tuesday. A weaker US dollar is seen as beneficial to gold and other dollar-denominated commodities, making them cheaper for users of other currencies.
However, the rise in US Treasury yields is seen as a negative factor. Falling yields have raised gold prices this year, lowering the opportunity cost of holding non-performing assets such as raw materials.
Fawad Razaqzada, a market analyst at Think Markets, said in a report that it could suffer a strong rally in the US dollar and a drop in government bond prices (Treasury prices and yields are moving in the direction opposite) to trigger a strong sell-off in gold, but you think this is unlikely. Appear.
“Well, if you want yields to rise significantly, the Fed and other big central banks will have to abandon their dovish views and start tightening their belts. So it all comes down to the economy,” he said, “but now, such time For the foreseeable future, the world economy is not yet in a state where monetary policy, and even fiscal policy, must tighten. “
After US President Trump left the hospital for COVID-19 treatment, investor interest in riskier assets improved, limiting the rise in gold prices.
FXTM market analyst Han Tan said: “The weaker US dollar is eroding some of the downward pressure on spot gold.”
He added that while news of Trump’s upgrade initially encouraged adventurous emotions, it may be short-lived and the president’s true state of health is still in doubt.
Following Trump’s return to the White House, global stock markets are nearing their highs in more than two weeks, and the outside world is expected to introduce new economic relief measures for the coronavirus.
Trump recently stated on social media that he is feeling great and is looking forward to the October 15 debate.
“The next round of the US fiscal stimulus plan should be approved, which could push up the US inflation outlook and encourage gold bulls to come back to the fore,” Tan said.
With the support of massive stimulus measures from global governments and central banks, gold, which is seen as a hedge against inflation and currency devaluation risks, has risen 26% this year.
“The main risk is the next election in the United States. If the election results are close and Biden leads and Trump does not admit it, we will enter a long period of uncertainty,” said Carsten Fritsch, an analyst at Commerzbank.
“This is mild news for the US dollar and bullish news for gold.”
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