Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold was little changed, dipping less than 0.1% to close under $1,838, as pressure from stalled stimulus talks and pending approval of a vaccine offset early gains from weak jobs data and a falling dollar.

With final negotiations for the long-waited COVID-19 relief bill going nowhere, Congress bought itself more time by passing a one-week extension on spending to avoid a government shutdown, which would have occurred tomorrow. The aid and budget bills had recently been bundled together to push lawmakers to reach an agreement.

While most analysts believe a deal will be forthcoming, the lack of progress on additional stimulus weighs on sentiment for stocks and gold.

Like monetary easing from the Fed, fiscal stimulus floods the economy with cash, increasing the risk of long-term inflation and stoking demand for gold as an inflation hedge. At the same time, the additional funds encourage spending and risk appetite, which is bullish for stocks.

Also pressuring gold, the FDA is expected to approve the Pfizer/BioNTech vaccine for use in the US. While widespread distribution of vaccines will take time, their welcome arrival takes some of the safe-haven bid out of the metal price.

Gold had risen early in the session, reaching an intraday high above $1,854 after new applications for unemployment benefits surged to a three-month high, signaling further damage to the labor market by the resurging pandemic.

Also supporting gold, the dollar fell 0.3% against major rivals led by the euro after the ECB increased monetary easing by less than expected. A weaker dollar lifts gold and other commodities by making them less expensive overseas.

The other precious metals finished higher, with silver adding 0.4% while platinum and palladium climbed 0.9% and 2%, respectively.

At the Comex close: February gold dipped $1.10 to $1,837.40; March silver added a dime, to $24.09; January platinum picked up $9.20 to $1,027.70; and March palladium rose $44.90 to $2,335.50 an ounce.