Gold set for weekly loss as dollar holds firm

Gold slipped on Friday and looked set to post its first weekly drop in three, as the dollar held firm while additional US fiscal stimulus appeared unlikely before the presidential election.

Spot gold was down 0.1% to $1,906.80/oz by 3.20am GMT, losing 1.2% so far in the week. US gold futures were up 0.2% at $1,912.20/oz.

“There’s some further upside for the dollar and that’s been a major headwind for gold, in addition to the ongoing (US) stimulus negotiations which have yielded no progress,” said Edward Moya, a senior market analyst at Oanda. “I think everyone is settling on the likelihood that we are not going to have a deal before the election.”

US President Donald Trump said on Thursday he was willing to raise his offer of $1.8-trillion for a Covid-19 relief deal with Democrats in Congress, but the idea was shot down by his fellow Republican, Senate majority leader Mitch McConnell.

The dollar index was headed for its first weekly gain in three, supported by surging coronavirus cases and stalled progress towards US stimulus.

London will soon enter a tighter Covid-19 lockdown as the second wave of the pandemic spreads through Europe. The US Midwest also saw record surges in new cases.

“The outlook for gold is positive amid mounting economic concerns due to Covid-19 surges,” analysts at ANZ said in a note.

Gold, considered a hedge against inflation risks and currency weakening, has gained nearly 26% so far in 2020, helped by stimulus from governments and global central banks to revive their economies.

Silver fell 0.2% to $24.26/oz, and was down 3.5% for the week. Platinum dipped 0.1% to $863.39/oz, while palladium rose 0.1 % to $2,354.95/oz.

Reuters