By Syndication Washington Post, Bloomberg · Yvonne Yue Li, Eddie Spence · BUSINESS, US-GLOBAL-MARKETS
Treasury Secretary Steven Mnuchin told House Speaker Nancy Pelosi Thursday that President Donald Trump would personally lobby to get reluctant Senate Republicans behind any deal that they reach. The dollar has been supported during the stalemate, while surging virus cases in Europe have also helped lift the greenback as investors seek safety amid new lockdown measures.
The Bloomberg Dollar Spot Index headed for a weekly gain amid stimulus stalemate after two straight weeks of decline.
"The yellow metal is now tracking closely to other momentum-crash precedents, which suggest continued rangebound markets and consolidation until the next catalyst," TD Securities analysts led by Bart Melek said in a note. Bullion may be prone to "a CTA liquidation" with the trigger to catalyze a modest liquidation now standing at $1,893 an ounce, they said.
"New offers or withdrawals of negotiations may just be window-dressing ahead of the elections," said Avtar Sandu, a senior manager for commodities at broker Phillip Futures Pte. "The concern for precious metals traders, and other financial market players, is the size of the second fiscal stimulus package after the election."
Spot gold was down 0.4% at $1,901.14 an ounce as of 10:53 a.m. in New York, on course for a 1.5% decline this week. Spot silver was little changed, palladium fell 1.3% and platinum added 0.7%. The Bloomberg Dollar Spot Index declined 0.2%.
Still, with the fundamental backdrop remaining positive for gold and silver, "a potential breakout may be on the cards in the not-too-distant future," said Fawad Razaqzada, market analyst with ThinkMarkets.
Heightened concerns over the economic impact of the resurgent virus cases in Europe and elsewhere mean inflationary pressures will remain weak and that central banks will likely keep interest rates low for even longer, according to Razaqzada. "We have already seen benchmark government bond yields drop noticeably again, especially for European countries," which boosts the appeal of lower-yielding or non-interest-bearing assets such as gold and silver, he said.
Traders will also keep an eye on trade talks between the U.K. and European Union. Negotiations are set to continue next week even after Prime Minister Boris Johnson said he believes a trade deal is now unlikely. He said the U.K. will now get ready to leave the bloc's single market and customs union at the end of the year without a new agreement in place.