Gold posts weekly loss with focus on stimulus talks

Gold on Friday posted its first weekly decline this month as investors weighed the outlook for fresh US stimulus and rising COVID-19 cases in Europe.

US Secretary of the Treasury Steven Mnuchin on Thursday told US House of Representatives Speaker Nancy Pelosi that US President Donald Trump would lobby personally to get reluctant US Senate Republicans behind any deal that they reach.

Pelosi told Democratic colleagues that a divide persists with the White House in negotiations.

The US dollar has held up during the stalemate, while surging COVID-19 cases in Europe lifted the greenback on demand for an investment haven.

“The yellow metal is now tracking closely to other momentum-crash precedents, which suggest continued range-bound markets and consolidation until the next catalyst,” TD Securities analysts led by Bart Melek said in a note.

Bullion might be prone to “a CTA liquidation” with the trigger to spur some selling at US$1,893 an ounce, they said.

Spot gold fell about 0.3 percent to US$1,901.46 in New York, for a 1.5 percent decline this week.

Silver dropped 0.2 percent, palladium declined 1.1 percent and platinum was little changed.

Gold futures for December delivery on the Comex fell 0.13 percent to settle at US$1,906.40, down 1 percent for the week.

“The concern for precious metals traders, and other financial market players, is the size of the second fiscal stimulus package after the election” in the US, Phillip Futures Pte senior manager for commodities Avtar Sandu said.

Heightened concern over the economic impact of the resurgent virus in Europe and elsewhere means inflationary pressures would remain weak and that central banks would likely keep interest rates low for even longer, ThinkMarkets analyst Fawad Razaqzada said.

“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.

Money managers in Asia are deploying a range of traditional and unconventional strategies to cushion any losses as they brace for turbulence in the lead-up and aftermath of the US presidential election.

Several investors suggest more conventional hedges, such as the yen and gold, as well as just holding cash to avoid risk exposure.

Adrian Zuercher, head of global asset allocation at UBS Group AG’s wealth management arm, is optimistic about the months ahead, but still “mindful” of the risks related to the election.

Additional reporting by staff writer

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