Gold hits over one-week low as dollar gains ground

Gold prices fell to an over one-week low on Monday, as the dollar firmed and talks about the new U.S. coronavirus aid package showed no signs of progress.

Spot gold fell 0.1% to $1,898.28 per ounce by 0347 GMT, after hitting $1,890.19, its lowest since Oct. 15.
U.S. gold futures were down 0.3% at $1,899.30.

“In the near-term, there seems to be a lack of impetus to find extra buyers (for gold)… A lot of it is because we’re trading in the looming shadow of the U.S. elections and stimulus speculation,” said IG Markets analyst Kyle Rodda.
The dollar index was up 0.2% against a basket of currencies.

U.S. House Speaker Nancy Pelosi on Sunday said the Trump administration was reviewing the latest plan for more COVID-19 relief and that she expected a response on Monday.

With the November presidential elections fast approaching, analysts say a victory for Democrat rival Joe Biden could help gold rally on the back of a potential large stimulus package.

“It is unlikely we may see much (gold) price volatility before next week’s U.S. Presidential voting,” OCBC said in a note.
“We expect prices to continue trading close to the $1,900/oz level this week.”

Rising COVID-19 cases in the United States are underpinning the need for more stimulus. According to a Reuters tally, hospitalizations are rising and have hit a two-month high.

France registered record increase in infections over the weekend and Spain announced a state of emergency as a second wave of cases surges through Europe.

Widely viewed as a hedge against inflation and currency debasement, bullion has gained 25% this year as central banks and governments globally unveiled unprecedented stimulus measures to cushion the economic fallout from the pandemic.

Elsewhere, silver dipped 1.1% to $24.32 per ounce. Platinum fell 1.4% to $889.30 and palladium was down 0.7% to $2,375.54.