Gold futures prices closed lower for the first time in three sessions and touched one-week lows in Wednesday’s (9th) trading, weighed down by a stronger U.S. dollar, as investors await further developments in Congress on the new COVID-19 relief package and the rollout of U.S. vaccines.
Gold fell after the Treasury Secretary proposed a new stimulus package of $916 billion, including $600 per person, but House Speaker Nancy Pelosi said it was unacceptable due to a proposed reduction in federal unemployment benefits from $180 billion to $40 billion, and Senate Majority Leader Mitch McConnell said the Democrats were not cooperating.
At the same time, the dollar rose, putting pressure on dollar-denominated gold, and bond yields rose, undermining the strength of non-yielding gold.
Edward Moya, senior market analyst at Oanda, said, “As McConnell said the Democrats showed no signs of budging, the dollar returned to growth, sending gold prices back down. The ICE dollar index rose 0.2% on Wednesday, but is still down more than 5% so far this year.
Moya also noted that “the upcoming approval of a new crown vaccine in the U.S., followed by intensive negotiations on the stimulus package this week, will keep gold prices in a state of uncertainty.
The U.K. has already launched a neo-crown vaccine, and the U.S. may follow quickly, as the Food and Drug Administration (FDA) prepares to review vaccine candidates from Pfizer (PFE-US) and BioNTech (BNTX-US) on Thursday. The entry of vaccines into distribution has reduced the need for safe-haven investments in anticipation of a return to a more normal economy.
Gold futures prices for February delivery fell $36.40, or 1.9%, to close at $1,838.50 an ounce, reaching their lowest point since December 2.
Silver futures for March fell 75 cents, or 3 percent, to close at $23.99 an ounce. It was 0.2 percent lower in the previous session.
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