Gold eases on buoyant dollar as US stimulus bets fade

New York

GOLD edged lower on Thursday as the dollar gained after US Treasury Secretary Steve Mnuchin dashed hopes for a new fiscal stimulus package before the presidential election.

Spot gold fell 0.1 per cent to US$1,899.57 per ounce by 740 GMT, after rising as much as 1.2 per cent on Wednesday. US gold futures were down 0.2 per cent to US$1,903.90 per ounce.

"The (gold) market is still treading water waiting for further clarity on what stimulus package may be needed in the United States," said Cameron Alexander, manager of precious metals research at Refinitiv Metals Research. "Gold will rise once the details of a possible stimulus package become available, but that may not happen for a while."

Mr Mnuchin said he and democrat lawmakers were "far apart" on a coronavirus economic relief package, and that a deal would be hard to reach before the Nov 3 election, prompting investors to seek the safety of the dollar.

The dollar is still regarded as a safe haven and is holding gold prices down, Refinitiv's Mr Alexander added.

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Gold, considered a hedge against inflation and currency debasement, has climbed 25 per cent this year amid unprecedented levels of global stimulus to ease the economic blow from the pandemic.

"Gold should resume its longer-term rally after the election into the end of the year," said Jeffrey Halley, a senior market analyst at OANDA, adding that the metal was likely to trade between US$1,880 and US$1,920 in the near-term.

Fuelling further concerns about an economic recovery, some European nations are closing schools, cancelling surgery and enlisting student medics as Covid-19 cases surge. REUTERS