Gold futures plunged to their lowest in nearly two weeks on Monday, hurt by a stronger U.S. Dollar and a steep sell-off in the stock market. Meanwhile, investors are looking ahead to U.S. Federal Reserve policymakers’ speeches this week for clues on further stimulus measures to revive the coronavirus-battering economy.
At 10:30 GMT, December Comex gold futures are trading $1938.00, down $24.10 or -1.23%.
Weakness in the global equity markets is increasing the U.S. Dollar’s appeal as a safe-haven asset. This is driving down foreign demand for dollar-denominated gold.
The major Asia-Pacific stock indexes were lower on Monday, with Hong Kong’s Hang Seng Index leading losses. European stocks retreated Monday as allegations surrounding bank dealings and rising coronavirus infections weigh on market sentiment around the world.
U.S. stock futures fell sharply early Monday as a number of factors rattled traders amid a three-week losing streak for the market.
The weakness in the global equity markets is encouraging investors to sell positions in gold to cover losses and to meet margin calls.
Last week, the Fed failed to announce additional stimulus measures. This week states with new concerns over a fiscal stimulus package from the government.
Negotiations for a second stimulus bill could become more complicated after the passing of Supreme Court Justice Ruth Bader Ginsburg, which could lead to a bitter nomination process ahead of the election. Trump said he would nominate someone this week to take Ginsburg’s seat. Republicans and Democrats have been in a stalemate since July after provisions from the previous stimulus bill expired.
Chris Krueger, Washington strategist at Cowen, said in a note that a new coronavirus stimulus bill is now “unlikely until post-November 3 as the fight over Justice Ginsburg’s empty seat will consume D.C.”
A day-long break in the U.S. equity markets could pressure gold prices all session if investors are forced to liquidate positions in the precious metal to cover margin calls and losses. Furthermore, increased demand for the safe-haven U.S. Dollar could be another source of pressure on gold.
Finally, look for pockets of volatility throughout the session with Federal Reserve Chairman Jerome Powell set to deliver a speech at 14:00 GMT. This is followed by speeches from FOMC Member Brainard at 16:00 GMT and FOMC Member Williams at 22:00 GMT.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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