Gold traders under pressure, as it drops below $1,900
- 8th October 2020
- Posted by: Hakeem
- Category: Commodities
Gold price drifted lower on Thursday at Asia’s trading session with renewed hopes for more U.S. stimulus deal leading, gold traders to retreat from buying more of the precious metal.
What we know; Gold futures prices edged down 0.17% at $1,887/ounce at the time this report was drafted. Unsurprisingly, global stocks led by Asian stocks printed higher.
Quick Fact: It should be noted that the precious metal typically moves in the opposite direction from global stock markets, especially the American and European stock markets.
- Humans are emotionally and physically drawn to gold. It provides a significant store of value.
- Global Investors buy gold mainly to hedge against inflation.
The US President in a tweet seen by Bigwig FX directed Congress to pass money for airlines, small businesses, and stimulus checks of $1,200 for individuals, after pausing talks with the opposition party over the latest stimulus deal.
However, the chances of even the present mini-stimulus package seeing the light of day at U.S capitol before the U.S Presidential election seems dim with U.S fiscal officials downplaying the possibility, and Speaker Nancy Pelosi hitting back at President Trump for halting the talks on a more detailed stimulus deal
Stephen Innes, Chief Global Market Strategist at Axi gave key insights on why the precious metal seems to be out of favor in the near term by saying; “The yellow metal seems to be falling out of favor again and maybe getting dissuaded by the rise in US yields and the lack of follow-through on US dollar selling, particularly against the Euro.
“I still think bullion finds its short-term legs as there should be enough volatility from the election, particularly from retail investors to aid gold. Also, a stimulus package is not permanently off the table. On the margin, this will be gold supportive and there should be good demand towards the 100-day moving average around $1958.”
The U.S treasury yields are becoming attractive to taper the precious metal bulls’ run.