Gold price rose from one and a half month low on Tuesday ahead of President-elect Joe Biden’s inauguration on Wednesday.
The precious metal, largely regarded as a haven asset by investors, edged up by 0.2 percent to $1,844.52 per ounce on Tuesday, up from $1,802.61 on Monday.
He said, “The key factor appears to be the (U.S.) currency.”
As expected, a change in administration comes with the change in economic policies, especially taking into consideration the peculiarities of the present situation. In fact, even though Biden, Janet Yellen and the rest of the new cabinet are expected to go all out on additional stimulus with the support of Democrats controlled Houses, economic uncertainties with rising COVID-19 cases and slow vaccine distribution remained a huge concern.
Also, the effectiveness of the vaccines can not be ascertained until wider rollout.
Still, which policy would be halted or sustained by the incoming administration remained a concern that has forced many investors to once again flee other assets for Gold ahead of tomorrow’s inauguration.
Gold Slips on Dollar Rebound; Platinum Rally Pauses
Gold slipped on Friday as the dollar rebounded, while platinum took a breather after expectations of a rebound in industrial demand drove a rally to a more than six-year peak and put it on course for its best week in two months.
Spot gold fell 0.6% to $1,815.30 per ounce by 1009 GMT.
U.S. gold futures slipped 0.5% to $1,816.90.
The dollar edged up 0.2%, reducing gold’s appeal for other currency holders.
“The inverse relationship between gold and the dollar has been strong recently and the rebound in the dollar has had a negative impact,” David Madden, market analyst at CMC Markets UK, said.
Strength in European shares, which are set for a second consecutive week of gains, also weighed on safe-haven gold.
Still expectations for a stimulus package in the United States helped to put gold prices on course for a 0.2% rise this week, which would be its first weekly rise in three. Investors often buy gold to hedge possible risks of inflation that could be spurred by massive stimulus.
“Our thesis for the next year or two is that equities and gold are going to do well because of inflationary expectations and monetary and fiscal stimulus remain supportive for both,” said Hitesh Jain, lead analyst at Mumbai-based Yes Securities, adding that the metal could rise to $1,950 this year.
Spot platinum fell 1% to $1,222.47 an ounce after prices scaled a more than six-year peak of $1,268.88 on Thursday.
The autocatalyst metal was set for an 8.9% weekly gain, which would be its best since early December.
“Reports that some future and derivative exchanges have increased their margin requirements have put the brakes on the demand for platinum,” CMC’s Madden said.
But expectations for a rebound in industrial production and the automotive sector this year should lift the metal, he added.
Silver gained 0.2% to $26.99 an ounce and palladium rose 0.1% to $2,347.97.
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