Gold & Silver

Gold edges up on softer dollar, Fed stimulus hopes

Reuters November 23 | Updated on November 23, 2020

Retail customers are slowly adjusting to higher prices (file photo)   -  The Hindu

Gold edged higher on Monday, as a softer dollar and hopes of further US monetary stimulus offset optimism over the quick rollout of a COVID-19 vaccine and bolstered the precious metal's appeal. Spot gold rose 0.1% to $1,872.76 per ounce by 0327 GMT and US gold futures were little changed at $1,871.80.

US Treasury Secretary Steven Mnuchin on Friday reassured markets that the Fed and Treasury had many tools left to support the economy, after deciding to de-fund several Federal Reserve lending programs by the end of the year. “Ironically, failure to deliver a fiscal package is supportive for gold,” said Michael McCarthy, chief strategist at CMC Markets, adding there might be more reliance on Fed support, which will take the form of liquidity and lower interest rates. Non-yielding gold is often seen as a hedge against inflation that is likely to result from stimulus measures. Novel coronavirus cases crossed 12 million over the weekend in the United States, while rising cases in Germany fuelled worries over an extended lockdown.

Also lending support to bullion was a softer US dollar that reduced the cost of purchasing it to other currency holders. While interest rates are likely to remain low and the dollar weaker next year, investors may be less inclined to chase prices higher and patiently wait for buying the dips opportunities, Avtar Sandu, senior commodities manager at Phillip Futures, said in a note.

Meanwhile, a broad gauge of Asian shares touched record highs buoyed by vaccine hopes. Though gold has found support near $1,875, a technical level, there are downside risks from a potentially stronger dollar that could push the metal down to $1,800-$1,790, CMC Markets' McCarthy said. Silver firmed 0.4% to $24.25 an ounce. Platinum rose 0.1% to $946.75, while palladium was up 0.4% at $2,334.23.

Published on November 23, 2020

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