Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinEnding a three-day winning streak, gold edged down 0.1% to close under $1,889 as stalled stimulus talks helped to lift the dollar, crimping demand for alternative assets. But the metal finished the week 2.5% higher for its third straight weekly rise, buoyed by a dovish Fed and prospects for additional monetary stimulus.

Congressional leaders hit another impasse in negotiations over the new coronavirus stimulus package, with some Republican senators now resisting the extension of Federal Reserve lending programs created in March under the CARES Act. In a controversial move, Treasury Secretary Steven Mnuchin recently decided to terminate these programs designed to aid small businesses.

In addition to the $900 stimulus package, lawmakers are haggling over $500 billion needed to keep the government open for the rest of the fiscal year, through next September. Unless they agree to an extension, the government will shut down at midnight tonight if the combined bill is not passed.

Like monetary easing from the Federal Reserve, fiscal stimulus is bullish for gold because it floods the economy with new money, increasing the risk of inflation and currency devaluation. After meeting earlier this week, the central bankers reiterated their intention to maintain easing even as inflation rises.

The dollar bounced 0.3% higher on the uncertainty, pressuring gold and other commodities priced in it for global trade.

Wall Street also pulled back, with Dow sliding 0.7% while the S&P 500 and Nasdaq dropped 0.8% and 0.5%, respectively.

The other precious metals were mixed for the day but higher for the week. Silver dropped 0.6% but still surged 8.1% for the week. Platinum slid 0.7% today but gained 2.1% this week. Palladium added 1% today and 1.7% this week.

At the Comex close: February gold dipped $1.50 to $1,888.90; March silver dropped 15 cents to $26.03; January platinum lost $7 to $1,043.10; and March palladium added $24.50, to $2,372 an ounce.