Gold Sits Above $1,900 Amid Brawl Over Stimulus

(C) Reuters.

By Barani Krishnan

Investing.com – Gold settled in the green zone for a second straight day on Thursday, staying above the key $1,900 an ounce level despite a din of confusion over what the Trump administration wants for a new Covid-19 relief deal.

After U.S. Treasury Secretary Steven Mnuchin unwittingly triggered Tuesday’s financial markets’ implosion by doubting an agreement on a coronavirus stimulus anytime soon between him and House Speaker and Democrat rival Nancy Pelosi, more talk emerged from the White House and Senate on Thursday that didn’t take the matter further.

Mnuchin gave a call-in interview to CNBC on Thursday, reiterating that he was open to doing a modest and “targeted” deal with Pelosi, suggesting she move some $300 billion of previously allotted money to needy Americans. The House Speaker, arguing that President Donald Trump was seeking a symbolic victory ahead of the Nov. 3 election rather than genuinely helping struggling poor people, has refused to do half measures, sticking to her proposed $2.2 trillion package.

Trump, who faces Democrat Joe Biden in the Nov. 3 election, reiterated his $1.8 trillion offer in an interview on Fox Business. But Senate Majority Leader and Trump’s top ally Mitch McConnell later told reporters that he could only get votes for a $500 billion account, and that too after the election.

Despite the back and forth, gold prices rose. Though modest, it was a remarkable performance by the yellow metal, considering that the dollar also rallied.

U.S. gold for December delivery settled at $1,908.90 an ounce on New York’s Comex, up $1.60, or 0.1%. On Wednesday, December gold rose 0.7%, recovering some ground after a 1.8% plunge the previous day.

Spot gold, which reflects real-time trades in bullion, was up 4.16, or 0.2%, at $1,905.82 by 3:00 PM ET (19:00 GMT).

“Gold is hovering around the $1,900 level and seems poised to consolidate until the U.S. presidential election passes,” said Ed Moya, analyst at OANDA in New York.

“Fiscal stimulus before November 3rd seems less likely and if the election yields a blue wave, Biden’s infrastructure spending plan will be very negative for the U.S. dollar and in turn positive for gold,” Moya said, referring to the blue colors of the Democrat party.