By Barani Krishnan
Investing.com - Gold moved back under $1,900 on Thursday snapping a three-day run-up as its rival, the U.S. dollar rallied. Comments by the head of Congress and White House signaled a tough road ahead for a Covid-19 stimulus even after next week’s U.S. election.
Spot gold, which reflects real-time trades in bullion, was down $6.90, or 0.4%, at $1,870.17 by 3:15 PM ET (19:15 GMT).
U.S. gold futures for December delivery settled the day’s trade at $1,868, down $11.20, or 0.6%. December gold had risen a modest 0.4% over three previous occasions, catching a break as the dollar slid.
Congress approved a Coronavirus Aid, Relief and Economic Security (CARES) stimulus in March, dispensing roughly $3 trillion as paycheck protection for workers, loans and grants for businesses and other personal aid for qualifying citizens and residents.
Democrats have been locked in a stalemate since with President Donald Trump’s Republican party on a successive package to CARES. The dispute has basically been over the size of the next relief as thousands of Americans, particularly those in the airlines sector, risked losing their jobs without further aid.
Hope for a new Covid-19 stimulus agreement before the election —let alone the actual delivery of additional aid — has evaporated over the last two weeks, despite months of negotiations between the White House and Congress. Hopes had risen of late that a deal might still be possible after next Tuesday’s presidential election, regardless who the winner of that would be: Trump or his Democrat challenger Joe Biden.
But Congress Speaker Nancy Pelosi revealed on Thursday that such hopes might be in vain, saying Republicans had yet to answer her on funding for seven critical areas: a national Covid-19 testing and tracing plan, state and local aid, school funding, childcare funding, changes to certain tax credits, federal unemployment insurance and liability protections for workers.
White House Economic Adviser Larry Kudlow said the administration was not depending on the stimulus to aid economic recovery — suggesting further pushback from Trump should he lose the White House.
The U.S. economy grew by a record 33.1% in the third quarter, data released on Thursday showed. But that rebound came after a 5% drop in the first quarter and a steepest drop ever of 31.4% percent in the April to June period. In 2019, the economy grew by 4.1 percent.
Gold, typically used as a hedge against inflation, had gained about $500 an ounce between March and August, hitting a record high of nearly $2,090, on expectations of huge COVID-19 related spending and fiscal deficit in the United States.