Gold Up on Mixed U.S. Stimulus News
By Administrator _India
Gold futures inched up 0.08% to $1,863 by 11:53 PM ET (3:53 AM GMT).
Investors in gold were left uncertain as to which way to turn on Friday morning in Asia. Overnight, the U.S. has made two conflicting moves regarding the future of its COVID-19 stimulus path. On the one hand, Treasury Secretary Steven Mnuchin has asked the Federal Reserve to return funds for a general loan system that it is administering to support various organizations during the pandemic. And on the other, Senate Republican Majority Leader Mitch McConnell has agreed to restart talks with Democrats on a new COVID-19 stimulus package.
Mnuchin has sent a letter to the Fed requesting that $455 billion be returned to government coffers, the Fed is currently using the funds to run a loan scheme that supports business, non-profits, and local government through the COVID-19 crisis. The scheme is widely considered successful in staving off some of the worst effects of the coronavirus pandemic.
The U.S. Federal Reserve responded that it “would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy.”
Usually, this would be a negative for gold, as removal of stimulus should strengthen the dollar. However, over the same brief period, Republican heavyweight McConnell has said that his party is prepared to return to previously abandoned discussions with the Democrats on a new COVID-19 relief package. The talks have been deadlocked for months, and there has seemed to be no agreement in sight.
The news of the resumption of the meetings is a positive for gold, as a stimulus package would have the effect of weakening the greenback and making it cheaper for holders of other currencies to buy the precious metal.
The slight positive trend for gold comes as the dollar crept down earlier in the session and global markets are also mixed, with little movement overall.