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Oct 1, 2020

Commodities | Gold Price Report: Gold gains 1% on hopes for U.S. stimulus

 

2-3 minutes - Source: CNBC


Gold bullion

An Argor-Heraeus SA branded two hundred and fifty gram gold bar, center, sits in this arranged photograph at Solar Capital Gold Zrt. in Budapest, Hungary.

Akos Stiller | Bloomberg | Getty Images

Gold jumped 1% on Thursday to surpass the key $1,900 level on renewed hopes for a U.S. stimulus package that could help ease the economic pain from the coronavirus, while a easing dollar further boosted the safe-haven metal.

Spot gold rose 1.04% to $1,905.06 per ounce, having earlier risen to its highest since Sept. 22 at $1,908.86. U.S. gold futures rose 0.72 % to $1,909.20 per ounce.

Investors were eyeing talks between U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin to reach a deal on the long-awaited COVID-19 relief bill.

“If there’s a deal, chances are stimulus will reignite the idea that inflation will move towards the Federal Reserve’s target,” which along with the interest rate suppression policy by the Fed are very good catalyst for gold, said Bart Melek, head of commodity strategies at TD Securities.

He added, the breakthrough in the psychological barrier of the $1,900 level can further drive the market technically a little higher. The dollar fell to a more than one week low versus rivals, making gold cheaper for holders of other currencies.

Meanwhile, U.S. manufacturing activity unexpectedly slowed in September as new orders retreated, while U.S. weekly jobless claims drifted lower, but remained at recession levels, further bolstering the metal’s safe haven appeal.

“The main driver (for gold) is investment money and reaction to economic headlines, geopolitical headlines and the dollar,” David Govett, CEO of Govett Precious Metals and a former trader said.

“A lot of those things are factored in but its going to get worse before it gets better and because of that gold is going to benefit and move back to $2,000”.

Elsewhere, silver rose 2.56% to $23.80 per ounce. Platinum was up 1.05% to $897.63 per ounce, while palladium gained 1.42 % to $2,337.48 per ounce.

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