Gold recovers part of yesterday’s sale despite unlikely pre-election stimulus deal


Gold has recovered about a third of yesterday’s massive selloff in trading today. At 4:20 p.m. EST, the most active December 2020 Comex contract is currently set at $ 1,904.80, for a net gain of $ 10.20 (+ 0.54%). Today’s gains are in part the net result of the weakness of the dollar as well as market participants who drove the precious yellow metal higher.These gains came in light of a lingering deadlock and the inability of the House and Senate to agree on a much needed budget support plan. Comments by US Treasury Secretary Steven Mnuchin were pessimistic about a fiscal stimulus package ahead of the presidential election.

Secretary Mnuchin spoke at a conference sponsored by the Milken Institute in which he said: “At this point it would be difficult to do something before the election and execute it, given where we are. and the level of detail, but we’re going to try and keep working on these issues. ”

The improbability of a fiscal stimulus going ahead before the election led to the shutdown of all three major US stock indexes. According to Reuters, “Wall Street finished weaker on Wednesday, led lower by Amazon and Microsoft, as investors lost hope that a US fiscal stimulus would be approved before the November presidential election.”

However, even as hopes for a fiscal stimulus package have faded, gold has recovered from yesterday’s $ 30 drop as rising new cases lead to curfews and lockdowns. in Europe, as well as peaks in parts of the United States. Reuters reported that “France has imposed curfews as other European countries close schools, cancel surgeries and enlist medical students as overwhelmed authorities face nightmarish scenario of COVID-19 resurgence at the start of winter. ” In Europe, new cases of the virus are around 100,000 per day, almost double the daily reported cases in the United States which currently stand at 51,000.

According to John Hopkins University, the total number of cases worldwide is now 38,344,196, with more than one million deaths worldwide. In the United States, 52,406 new cases have been reported as of October 14.

The fact that the number of cases continues to rise globally decreases the likelihood of a rapid economic recovery. The uncertainty created by the pandemic and the upcoming presidential election could certainly support gold pricing at least until next month’s presidential election.

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Wishing you, as always, good trading and good health,

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