Gold down, buyers are ready for Biden’s “trillions” in financial stimulus applications
From Gina Lee
Investing.com – Gold was down in Asia Thursday morning, and investors awaited details of President-elect Joe Biden’s plans for further stimulus measures.
fell 0.85% to $ 1,839.20 at 12:16 p.m. CET (5:16 p.m. GMT). US Treasury bond yields and both rallied on Thursday. Ten-year benchmark government bond yields rose to a ten-month high, boosting the dollar against competing currencies.
Biden has promised to take action that could cost “trillions” dollars and will reveal it later in the day.
“Tax incentives will help stimulate economic recovery, leading to rising real rates and raising the Fed’s dwindling hopes. On the other hand, they will also improve the inflation outlook,” said Margaret Yang, strategist at DailyFX.
The yellow metal will fight for that price level as the incentive will have both positive and negative effects, she added.
Investors will also look for more clues about the US monetary policy outlook when Federal Reserve Chairman Jerome Powell speaks at a virtual event later that day. Fed Governor Lael Brainard has already resisted proposals that the Fed could curtail its bond purchase program in 2021.
The central bank said on Wednesday the U.S. economy is growing modestly, despite tempering optimism as the number of COVID-19 cases continues to rise.
“I don’t think the Fed is serious about tapering anytime soon in the face of the pandemic and fragile economic recovery. However, any indication of tapering in a slightly longer horizon will cause some unrest among gold traders,” said DailyFX’s Yang.
Meanwhile, investors are monitoring the ongoing political turmoil in the US before Biden and his administration take office on Jan. 20. Earlier in the day, the House of Representatives voted between 232 and 197 to indict incumbent President Donald Trump of inciting support for last week’s Capitol Hill uprising that killed five people and searched the building.
The vote opens Trump’s second impeachment in just over a year since his first, making him the first U.S. president to face two impeachments.
Disclaimer: Fusion Media would like to remind you that the information contained on this website is not necessarily real-time or accurate. All CFDs (stocks, indices, futures) and forex prices are not provided by exchanges, but by market makers. As a result, prices may not be accurate and may differ from the actual market price. This means that the prices are indicative and not suitable for trading purposes. Therefore, Fusion Media is not responsible for any trading loss you may incur as a result of using this information.
Fusion Media or anyone involved with Fusion Media assumes no liability for any loss or damage caused by reliance on the information such as data, offers, charts and buy / sell signals contained on this website. Please be fully informed about the risks and costs associated with trading in the financial markets. This is one of the riskiest forms of investment possible.