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Gold Rallies on Dollar Weakness, Fresh US Stimulus Hopes

October 5, 2020 at 17:23 by Andrew Moran

Gold futures are rallying to kick off the trading week, driven primarily by a weaker US dollar and fresh fiscal stimulus talks in Washington. The yellow metal is looking to recover from a 0.4% drop on Friday amid a disappointing jobs report and President Donald Trump testing positive for COVID-19. But with more risk throughout the global financial markets, could gold retest $2,000 this month?

December gold futures surged $14.00, or 0.73%, to $1,921.70 per ounce at 17:10 GMT on Monday on the COMEX division of the New York Mercantile Exchange. The yellow metal advanced about 2.4% last week, lifting its year-to-date gain to more than 26%.

Silver, the sister commodity to gold, is also soaring to start the trading week. December silver futures tacked on $0.536, or 2.15%, to $24.545 per ounce. The white metal enjoyed a weekly jump of roughly 4% last week, bringing its 2020 rally to about 34%.

A sliding greenback has been the crucial factor in the metal market’s ascent on Monday. The US Dollar Index, which measures the dollar against a basket of currencies, tumbled 0.4% to 93.46, from an opening of 93.87. The index has slumped in recent sessions, falling nearly 1% over the last week. A lower buck is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.

With President Donald Trump’s condition seemingly improving from the coronavirus, there is fresh optimism surrounding the progress over the proposed $2.2 trillion fiscal stimulus deal. President Trump has tweeted that he wants to get a deal done, while House Speaker Nancy Pelosi said negotiations are advancing. It is unclear when a vote would take place over the stimulus and relief package.

When it was announced that Trump would be treated for the highly infectious respiratory illness, the news rattled markets amid uncertainty over the 2020 election. Jim Wyckoff, a senior analyst at Kitco.com, wrote in a research note:

Reports said Trump could be released from Walter Reed hospital today. Also, some are arguing that former vice president Joe Biden’s widening lead in the presidential polls that could provide a more decisive outcome of the election is a positive for trader and investor sentiment.

But gold prices might endure some weakness as new data highlighted that US factory orders climbed for the fourth consecutive month in August, rising 0.7%.

In other metal commodities, November copper futures slipped $0.0165, or 0.55%, to $2.961 per pound. November platinum futures jumped $14.10, or 1.58%, to $905.50 an ounce. November palladium futures skyrocketed $52.20, or 2.25%, to $2,377.20 per ounce.

If you have any questions and comments on commodities today, use the form below to reply.

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