By Barani Krishnan
Investing.com - A day after being socked by a one-two punch from vaccine developments over the Covid-19, gold was back near the psychologically-important $1,750 level on Tuesday as senior Trump administration officials admitted there was a chance for the government to lose from risky loans disbursed during the pandemic.
U.S. gold futures for June settled up 21.20, or 0.6%, at $1,745.60 per ounce. It scaled a one-month high of $1,760.55 on Friday before falling back in the previous session on news of preliminary success for the Covid-19 trial vaccine developed by Moderna (NASDAQ:MRNA).
Spot gold, which tracks real-time trades in bullion, was up $12.66, or 0.7%, at $1,745.22. On Friday, it hit 7-½ year highs of $1,751.54.
The U.S. Treasury and the Federal Reserve were “fully prepared to take losses in certain scenarios” on money left to be distributed by the administration under its fiscal response to the Covid-19 pandemic, Treasury Secretary Steven Mnuchin told a Senate banking committee.
Mnuchin did not elaborate on what the “certain scenarios” would be, but emphasized that the Treasury was ready to distribute the entire $500 billion appropriated to help struggling U.S. businesses.
“Fed Chair Powell and Treasury Secretary Mnuchin delivered over two-and-a-half hours of testimony that signaled the fundamental backdrop of never-ending support remains for risky assets,” said Ed Moya, analyst at New York-based online trading platform OANDA. “The Fed is far from done with pumping stimulus into the economy and gold prices are liking that.”