Gold treads water after sharp sell-off on U.S. stimulus delay
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Gold prices were little changed on Thursday after a steep sell-off in the previous session as a breakthrough in long-running negotiations among U.S. lawmakers over a pandemic relief package remained elusive.
Spot gold was steady at $1,839.54 per ounce by 0444 GMT, after slipping as much as 2.5% on Wednesday. U.S. gold futures gained 0.2% to $1,843.00.
“Gold has struggled as markets are disappointed with the inability of U.S. lawmakers to agree on a fiscal deal they were anticipating,” said Lachlan Shaw, National Australia Bank’s head of commodity research.
The U.S. House of Representatives approved a one-week extension of federal government funding, extending the time left to agree on a broader coronavirus relief package. But, the U.S. Senate Majority Leader Mitch McConnell said on Wednesday that Congressional lawmakers 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 U.S. 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 per ounce by 2021.
Meanwhile, Britain’s medicine 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. Offering a glimmer of hope was comments from some U.S. health officials that vaccinations could begin as soon as this weekend. “”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,” Shaw said.
Spot gold was steady at $1,839.54 per ounce by 0444 GMT, after slipping as much as 2.5% on Wednesday. U.S. gold futures gained 0.2% to $1,843.00.
