Gold Fluctuates With Traders Watching Dollar, Stimulus Talks
Gold Declines as New European Restrictions Hammer Risk Sentiment
(Bloomberg) -- Gold swung between gains and losses as traders assessed a rising dollar and fading chances for a U.S. fiscal stimulus package.
The Bloomberg Dollar Spot Index rose as much as 0.6%, with investors turning to the currency as a haven amid a surge in coronavirus cases. Germany, Italy and the Czech Republic posted record increases in virus cases, while Paris is set for a curfew and Londoners will be banned from mixing with other households indoors.
Gold has been whipsawed by the dollar in recent weeks after surging through much of the year amid unprecedented economic stimulus that raised fears of inflation. U.S. House Speaker Nancy Pelosi was scheduled to have another call with Treasury Secretary Steven Mnuchin Thursday in a continuing saga of talks on further aid for the economy.
“Absent a shock to risk sentiment, it appears gold is stuck in a holding pattern before the Nov. 3 U.S. election,” according to a report by Macquarie Wealth Management, noting gold has largely been driven by news over stimulus chances. “It looks increasingly likely that any package will be a post-election event, albeit that this could result in a larger boost than any pre-election compromise would have delivered.”
Federal Reserve policy makers including Chair Jerome Powell have warned of a weak U.S. recovery without sufficient government aid. Highlighting the risk, a report Thursday showed applications for jobless benefits unexpectedly jumped last week, adding to troubling signs for a U.S. labor market whose recovery from the pandemic was already slowing.
Spot gold rose 0.2% to $1,905.75 an ounce at 1:54 p.m. in New York, after falling as much as 0.6%. Gold for December delivery on the Comex rose 0.1% to settle at $1,908.90 an ounce. Spot silver slipped, while platinum and palladium advanced.
The Bloomberg Dollar Spot Index leveled off after earlier gains on Thursday that took it to a one-week high.
“Gold is really just continuing to pivot around $1,900 depending on short-term U.S. dollar moves,” said Janet Mirasola, managing director at Sucden Futures.
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