By Barani Krishnan
Investing.com - Gold rallied for a third straight day on Wednesday as the dollar tumbled and bulls in the yellow metal chased the prospects of a Covid-19 economic stimulus before the U.S. election in two weeks.
U.S. gold for December delivery settled at $1,929.50, up $14.10, or 0.7%. It rose 0.4% in two previous sessions.
Spot gold, which reflects real-time trades in bullion, rose $16.89, or 0.9%, to $1,922.86 by 3:23 PM ET (19:23 GMT).
The Dollar Index, which pits the greenback against six major currencies, tumbled for a third straight day on Wednesday, losing 0.5% to hit a seven-week low of 92.46 on speculation that the White House and Congress might reach agreement on a new coronavirus relief deal. Gold is an outright hedge for any losses in the dollar.
Hopes for a stimulus deal were kept alive on Wednesday by White House Chief of Staff Mark Meadows, who said he was “very hopeful that progress is being made” in the negotiations. Meadows added that the Trump administration will continue to stay engaged in talks with House of Representatives Speaker Nancy Pelosi over the coming days.
Congress, led by Pelosi and the Democrats, 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.
It’s anyone’s guess if a deal could be struck before the Nov. 3 presidential election, where Trump faces Democrat challenger Joe Biden. A preliminary agreement over the stimulus could be a positive talking point in the election for Trump, who trails Biden in most polls.
Another stimulus is also critical for the economy, which may be forced into a slower and weaker recovery from the Covid-19 without more aid, Federal Reserve Governor Lael Brainard said Wednesday.
The US economy was stuck in a "slight to modest" pace of recovery in September, with the job market struggling, as businesses tried to operate amid continued impact from the pandemic, the central bank’s Beige Book report of business conditions showed.