Gold treads water as US stimulus talks drag on

Bengaluru — Gold prices were little changed on Thursday after a steep sell-off in the previous session as a breakthrough in long-running US fiscal stimulus negotiations remained elusive.

Spot gold was steady at $1,839.54/oz by 4.44am GMT, after slipping as much as 2.5% on Wednesday. US gold futures gained 0.2% to $1,843.00. “Gold has struggled as markets are disappointed with the inability of US lawmakers to agree on a fiscal deal they were anticipating,” said Lachlan Shaw, National Australia Bank’s head of commodity research.

The US House of Representatives approved an extension of federal government funding, extending the time left to agree on a broader coronavirus relief package. But the US Senate majority leader Mitch McConnell said on Wednesday congressional legislators were still looking for a way forward on a relief package.

Gold is seen as a hedge against inflation and currency debasement. Against a backdrop of accommodative monetary policy and a weaker US dollar, gold should remain well supported with a low likelihood of a bear market, ANZ analysts said in a note, forecasting gold at around $2,100/oz by 2021.

Meanwhile, a British regulator warned against the use of Pfizer’s Covid-19 vaccine for those with allergies, after two people suffered adverse reactions, cooling optimism over a smooth coronavirus vaccine rollout.

“We could be seeing a regime change in gold markets as its correlation to real yields has weakened, due to investors continuing to move into riskier assets, creating a challenging outlook for safe-havens like gold,” National Australia Bank’s Shaw added.

On the technical front, gold may retest a support at $1,828/oz, a break below which could cause a fall to $1,798, according to Reuters technical analyst Wang Tao.

In other metals, silver rose 0.4% to $24.00/oz, while platinum gained 0.3% to $1,003.67 and palladium was up 0.6% at $2,278.07. 

Reuters