Gold slides to two-month low
Gold fell to a two-month low as the dollar extended gains and hopes for further US fiscal stimulus faded. Silver plunged after entering a bear market.
Bullion has retreated this week (ending 25 September) as the Bloomberg Dollar Spot Index climbed 2%. Congressional stimulus talks have stalled since early August with both political parties about USD1t apart in their offers. Virus cases continued to pick up in several nations, with France and Israel joining Britain in tightening lockdowns that could crimp the nascent economic recovery.
Gold has fallen back after hitting a record in August on massive stimulus programmes, negative real rates and a weakening dollar.
Spot gold declined as much as 0.8% to USD1,848.88 an ounce, the lowest since 22 July, before trading at USD1,856.44 as of 10:38 am in New York. Comex futures for December delivery fell 0.5% to USD1,859.60. Spot silver slipped as much as 4.8%.
Gold’s investment appeal over the summer was burnished as real treasury rates slid deeper into negative territory. Since early August, those rates have been almost flat, and it will take a significant boost to inflation expectations to drive them lower.
Fed officials are sounding the alarm about the US economic recovery. Chairman Jerome Powell told a congressional hearing that more support was likely to be necessary, while others were more full-throated, with Cleveland Fed President Loretta Mester saying it was very much needed given the “deep hole” the economy is climbing out of. Applications for US unemployment benefits were little changed last week, contrasting with estimates for a decline and highlighting an economic recovery that’s coming in fits and starts.
Support looks unlikely to come soon as stimulus talks are pushed to one side by the battle to appoint a new Supreme Court justice, following the death of Ruth Bader Ginsburg. That is a prelude to the upcoming presidential election, the biggest event on the precious-metals horizon. Tensions continue to rise after President Donald Trump on Wednesday (23 September) would not commit to a peaceful transfer of power if a tally of ballots shows victory for Democrat Joe Biden. Increasing political uncertainty could boost gold in the short term, according to analysts. – Bloomberg News.
The US Dollar Index closed 0.04% lower to settle at 94.354, the euro rose 0.10% to USD1.1672, the pound increased 0.18% to USD1.2747, and the yen weakened 0.02% to 105.41 per dollar.
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