- Gold’s ascent stalls as the US lawmakers discuss coronavirus aid, government funding bill.
- A potential stimulus deal could lift inflation expectations and gold.
Gold is taking a breather near $1,850, having risen more than 1% on Tuesday. Investors await the outcome of the US Congress leaders’ meeting on coronavirus relief and a funding bill to avoid a government shutdown over the weekend.
According to Reuters, House of Representatives Speaker Nancy Pelosi, a Democrat, hosted Senate Majority Leader Mitch McConnell, a Republican, as well as Senate Democratic leader Chuck Schumer and House Republican leader Kevin McCarthy, at the 7:30 p.m. ET (0030 GMT) gathering to end the long-standing impasse on the coronavirus relief package.
McConnell told reporters that lawmakers won’t leave the town this year without a fiscal stimulus deal, which could be attached to the government funding bill.
Scare assets such as gold could gather upside traction, and the dollar will likely drop on a potential stimulus deal. That’s because, fiscal stimulus has a stronger trickle down effect than monetary policy and often lifts inflation expectations. The renewed signs of weakness in the US real yields also favor upside in gold. However, if the lawmakers again fail to reach a consensus, investors could turn risk-averse, sending the dollar, gold’s biggest nemesis, higher.
The Bank of America’s latest fund managers’ survey has warned of exuberance on Wall Street and scope for a pullback. The dollar has been the preferred safe haven since the March crash. As such, correction in equities could bode well for the greenback and hurt the yellow metal.
Technical levels
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