Price of Gold Fundamental Daily Forecast – Sellers Back Off on Reports of Renewed Fiscal Stimulus Talks
Gold futures are edging lower on Friday shortly before the regular session opening after giving up earlier gains after buyers failed to materialize following yesterday’s potentially bullish technical closing price reversal bottom. The catalyst behind the move is a recovery in the U.S. Dollar Index. A higher dollar tends to weigh on dollar-denominated gold because it makes it too expensive for foreign buyers.
At 10:07 GMT, December Comex gold is trading $1869.00, down $7.90 or -0.42%.
Earlier in the session, gold prices inched higher as the dollar retreated and hopes for more U.S. stimulus measures resurfaced, although the precious metal was on track to post its steepest weekly contraction since August. The greenback was off its two-month peak was on track for its best week since early-April, up 1.5%, making gold more expensive for holders of other currencies.
Bullish gold investors grew hopeful after a lawmaker on Thursday said Democrats in the House of Representatives were working on a $2.4 trillion novel coronavirus stimulus package that could be voted on as soon as next week.
House Democrats are preparing a new, smaller coronavirus relief package expected to cost about $2.4 trillion as they try to forge ahead with talks with the Trump administration, a person familiar with the plans said Thursday.
The bill would include enhanced unemployment insurance, direct payments to Americans, Paycheck Protection Program small-business loan funding and aid to airlines, among other provisions, the person said. To reach the price tag, Democrats would chop roughly $1 trillion from their previous proposal for a fifth pandemic aid plan.
The party aims to restart stimulus negotiations with the White House after talks fell apart last month. House Speaker Nancy Pelosi has repeatedly pushed Treasury Secretary Steven Mnuchin and White House chief of staff Mark Meadows to boost the administration’s roughly $1.3 trillion offer by another trillion dollars.
Daily Forecast
Continued talk of fiscal stimulus and renewed demand for riskier assets could put some pressure on the U.S. Dollar, which would likely underpin gold prices.
The discussions about a relief proposal come as concerns grow about the potential for the U.S. economic recovery, boosted by the trillions in relief Congress has passed this year, to falter. Federal Reserve Chairman Jerome Powell among other economic experts, has warned the economy could take a hit without more fiscal stimulus. This is probably the biggest reason for this week’s decline in gold.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
