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Gold Heads for Weekly Gain on Fiscal Stimulus Optimism, Weaker Dollar

December 4, 2020 at 18:02 by Andrew Moran

Gold futures are headed for a weekly gain as fiscal stimulus talks and a weaker US dollar lifted metal prices. Although gold is trading in the red to close out the trading week, it is hovering at its best level in two weeks. Gold prices have failed to join the rally in the broader financial markets as the three coronavirus vaccines increased risk appetites and investor optimism over the last month. But while it might look like the gold rally has been deflated, many experts believe that the precious metal is still a worthwhile investment.

January gold futures shed $2.50, or 0.14%, to $1,838.60 per ounce at 16:48 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold is poised for a weekly surge of about 2.6%, adding to its year-to-date gain of 21%.

Silver, the sister commodity to gold, is ending the trading week higher. February silver futures tacked on $0.113, or 0.47%, to $24.25 an ounce. The white metal will enjoy a weekly spike of 7%, bringing its year-to-date rally to more than 35%.

The metal markets benefited from renewed talks over another coronavirus stimulus and relief package. Senate Majority Leader Mitch McConnell (R-KY) stated that Republicans and Democrats could reach a compromise on the $908 billion proposal as long as some Republican positions are agreed upon. House Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY) have stated that it is critical Washington passed COVID-19 legislation.

A slumping greenback helped the metal class this week. The US Dollar Index, which gauges the greenback against a basket of currencies, slipped 0.08% to 90.64, from an opening of 90.71. The index will record a weekly loss of 1.3%, contributing to its 2020 decline of 6%. A lower buck is good for dollar-pegged commodities because it makes it cheaper for foreign investors to purchase.

On the data front, the US economy added 245,000 new jobs in November, below the median estimate of 469,000 new positions. This is down from the 610,000 new jobs that the economy created in October. The unemployment rate fell from 6.9% to 6.7%. It represented the slowest employment growth rate since the labor recovery began in May.

The consensus is that the coronavirus vaccinations from Pfizer, Moderna, and AstraZeneca would negatively impact gold prices. However, traders are still bullish on the precious metal in the medium- and long-term due to central bank money-printing and higher government spending worldwide.

In other metal markets, January copper futures tacked on $0.038, or 1.09%, to $3.5285 per pound. January platinum futures picked up $34.90, or 3.36%, to $1,073.50 an ounce. January palladium futures surged $44.90, or 1.94%, to $2,362.80 per ounce.

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