Yahoo News Price of Gold Fundamental Daily Forecast – Short-Term Weak on Fading Stimulus Hopes; Long-Term Supported
Gold futures are trading lower on Thursday as some buyers abandoned hopes for a U.S. coronavirus aid package ahead of the November 3 presidential elections waned, in turn driving up demand for the safe-haven U.S. Dollar.
After hitting a one-week high on Wednesday, U.S. gold futures are under pressure today with investors starting to bet against a fiscal stimulus plan being agreed upon before the election. Losses are likely being limited, however, with some traders shifting their interest to the possibility of the stimulus plan being agreed upon after the election. Some believe an even bigger package will be coming in early 2021.
At 12:58 GMT, December Comex gold is trading $1908.70, down $20.80 or -1.08%.
Expectations of a pre-election stimulus package were dampened late Wednesday when President Trump accused Democrats of being unwilling to craft a compromise on aid. The news drove up the U.S. Dollar, dampening demand for dollar-denominated gold.
Fed’s Brainard Calls for More Fiscal Aid for Economy
Despite a “heartening” bounce back from the initial hit to the U.S. economy delivered by the COVID-19 pandemic, the recovery is uneven and uncertain and will require continued support to ensure it becomes broad-based and sustainable, Federal Reserve Governor Lael Brainard said on Wednesday, according to Reuters.
Brainard added, the biggest risk to her outlook for recovery is that fiscal support from the federal government will be withdrawn too soon. It’s a view widely shared by her Fed colleagues.
Fed Beige Books Sees US Economy Recovering Slowly, but Some Sectors Struggling
The U.S. economy continued to recover at a slight to modest pace through early October as consumers bought homes and increased spending, but the picture varied greatly from sector to sector, the Federal Reserve said on Wednesday.
US Weekly Jobless Claims Push Lower; Labor Market Momentum Slowing
The number of Americans filing new claims for jobless benefits declined more than expected last week, though they remain extremely high indicating a slowdown in the labor market and broader economic recovery from the COVID-19 pandemic as the boost from fiscal stimulus fades.
Daily Forecast
The early downside pressure is likely to continue throughout the session on Thursday unless policymakers report a breakthrough in the stimulus talks. Although we expect to see short-term pressure, we believe the gold market remains well supported with the Federal Reserve being accommodative for as long as it takes, and more fiscal stimulus likely coming after the election and early next year.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
