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Gold up Again on U.S. Stimulus Chase, Could Hit $1,900

CommoditiesDec 07, 2020 03:23PM ET
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By Barani Krishnan

Investing.com - Gold prices resumed their run higher, picking up from last week’s three-day rally, on signs that U.S. lawmakers were closing in on a fiscal deal to keep the government open and continue with paycheck protection for millions of Americans stressed by the Covid-19.

Gold for February delivery on New York’s Comex settled Monday’s trade up $26, or 1.4%, at $1,866 an ounce.

Last week, the benchmark gold futures contract gained almost $60, or 3.3%, amid signs that the U.S. Congress might reach agreement soon on a $908 billion Covid-19 stimulus bill. That rebound helped erase a significant portion of the previous week’s near 5% loss, which was Comex gold’s biggest weekly plunge since July.

The spot price of gold, which reflects real-time trades in bullion, was up $21.15, or 1.2%, to $1,858.47 by 3:08 PM ET (20:08 GMT). For the week, bullion rose 2.8%.

“Gold is surging higher and could look to make a run towards the $1,900 level before the end of the week,” said Ed Moya, analyst at New York’s OANDA.

Monday’s rally in gold was reignited by Congress’ aim to scrape together a coronavirus relief package before the end of this week and prevent a lapse of benefits that could send millions of Americans spiraling further into financial peril at the end of the year.

Gold prices typically rally in any stimulus or monetary expansion exercise.

Lawmakers aim to pass both pandemic aid and spending legislation before the government shuts down on Saturday, CNBC reported. They will have to quickly resolve several sticking points to meet the deadline.

A bipartisan group of U.S. lawmakers hopes to release a more detailed outline of its $908 billion aid proposal on Monday as it prepares legislative text.

Democrats, who control the House of Representatives, have backed the plan as the basis for an emergency relief bill as a sustained Covid-19 infection surge stresses hospitals across the country. Republicans, who have a majority in the Senate, have indicated they will support the measure without specifying how much exactly in dollars and cents.

Gold is emerging from one of its most brutal sell-offs ever after dynamic breakthroughs in COVID-19 vaccines and their potential availability before Christmas caused a run on money in safe-havens.

The yellow metal lost about 6% of its value in November, its most for a month since 2016 and fell into $1,700 territory. Investors have in recent weeks directed money mostly into stock markets and other risk assets such as oil, as those witnessed an epic rally amid the notion that vaccines and therapeutics would soon bring an end to the spread of the coronavirus.

Despite the continued emphasis on risk, gold as a haven is rallying again on talk of a new U.S. Covid-19 stimulus effort

For context, Congress originally passed in March the Coronavirus Aid, Relief and Economic Security (CARES) Act, dispensing roughly $3 trillion as paycheck protection for workers, loans and grants for businesses and other personal aid for qualifying citizens and residents.

In the past few months, however, Democrats have been locked in a bitter debate with the Republicans on a successive relief plan to the CARES Act. The dispute has basically been over the size of the next stimulus as thousands of Americans, particularly those in the airlines sector, risked losing their jobs without further aid.

The stalemate was finally broken last week with the $908 billion relief bill proposed by a bipartisan group.

Gold up Again on U.S. Stimulus Chase, Could Hit $1,900
 

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Comments (12)
Kannika Kredploy
Kannika Kredploy Dec 08, 2020 6:02AM ET
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up....
Ronpaul bot
Ronpaul bot Dec 07, 2020 9:40PM ET
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I think it's a safe bet to invest in gold stocks.. gold won't fall much more than 1500$.Mining companies will be more profitable this year.And in many countries recession will happen, more Fiat money both Eur and Usd will be dumped in the economy this should secure thw country price of gold.
Chan Myae
Chan Myae Dec 07, 2020 9:01PM ET
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Gold price must be 18...Read More
Chan Myae
Chan Myae Dec 07, 2020 9:01PM ET
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Gold price must be...Read More
Jjhein htet
Jjhein htet Dec 07, 2020 8:14PM ET
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1800 down
Jjhein htet
Jjhein htet Dec 07, 2020 8:13PM ET
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1800 down. ..
pete lorenz
pete lorenz Dec 07, 2020 6:11PM ET
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Almost sounds  like the election here yes it will go up then bang down again  flaten in janurary surge feb after all the  totals are in  No vacczine and stimuli on hold  thas the best beat
Thom Miller
Thom Miller Dec 07, 2020 6:05PM ET
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Gold is fake news. Don’t get caught in the upcoming bear trap....
LONG GODHAD
LONG GODHAD Dec 07, 2020 5:30PM ET
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1900 is sure baby
peter neal
peter neal Dec 07, 2020 4:07PM ET
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Democrats win Georgia / game on
Thiago Henri
Thiago Henri Dec 07, 2020 3:45PM ET
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Thanks for these news...probable after march and all stimulus and weak dollar ....gold will down like boat on a catarat ... Im waiting for this.... all are justing buying ....waiting stimulus for gold touchs 2k.... the bests waiting 2k or 1950 for big sell ......... But the best question:  " Are  Barani ...a buyer ....a seller or does all on gold like me?" :)
Barani Krishnan
Barani Krishnan Dec 07, 2020 3:45PM ET
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Thiago, I am neither buyer nor seller. I don't trade.
maryam shams
maryam shams Dec 07, 2020 3:45PM ET
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Thiago Henri
Thiago Henri Dec 07, 2020 3:45PM ET
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Barani Krishnan  ah nice .... :)
Bilal Majeed
Bilal Majeed Dec 07, 2020 3:45PM ET
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Sir will it go down after the bill passes???Kindly share ur experince on it
Jatin Khanna
Jatin Khanna Dec 07, 2020 3:45PM ET
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No it will not , if relief package bill comes in usa gold can touch 1950 again maybe 2000 but it will take time .RegardsJatin khanna
Steve Siew
Steve Siew Dec 07, 2020 3:45PM ET
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After the passage, gold and stock will tank. It is already price in equities. Sell on the news, ask question later
 
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