Firmer dollar pushes gold off three-week high, but aid package hopes check losses

Bengaluru — Gold fell back from a three-week high on Monday as the dollar firmed, though hopes for a new US coronavirus aid package checked the precious metal’s losses.

Spot gold slipped 0.1% to $1,928.06 per ounce by 5.29am, after hitting its highest level since September 21 at $1,932.96 earlier in the session. US gold futures were up 0.4% at $1,934.10.

“The dollar index has rebounded slightly, weighing on the precious metal,” said Margaret Yang, a strategist with DailyFx, which covers currency, commodity and index trading.

But “the technical trend has turned bullish in the near term and very soon it may test the key resistance level of $1,942,” she added.

The dollar index was up 0.1% against rivals, after negotiation on the US stimulus package ran into resistance and as the yuan dropped after China’s central bank took a measure seen as aimed at curbing its strength.

The Trump administration on Sunday called on Congress to pass a stripped-down coronavirus relief bill using leftover funds from an expired small business loan programme.

The $1.8-trillion economic stimulus proposal drew criticism from congressional Democrats and Republicans, yet investors seem optimistic that spending will resume at some point.

“There is going to be a stimulus coming really quickly after the election … The market will look through the fact that we don’t have stimulus now but that it is coming and that will be supportive for gold,” said Stephen Innes, chief global market strategist at AxiCorp.

Gold, considered a hedge against inflation and currency debasement, has gained 27% so far this year, boosted by unprecedented stimulus measures unveiled globally to cushion the economic fallout from the Covid-19 pandemic.

Silver gained 1.1% to $25.39 per ounce and palladium rose 0.4% to $2,450.30, while platinum eased 0.2% to $884.36.