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Gold Rises As Steven Mnuchin Sparks Fresh Stimulus Hopes

November 20, 2020 at 20:01 by Andrew Moran

Gold futures are rising to close out the trading week, driven by fiscal stimulus hopes from Treasury Secretary Steven Mnuchin. Despite the boost in the yellow metal, it is poised for a second consecutive weekly loss, a performance that has highlighted the sharp slowdown in bullion buying amid renewed confidence in the broader financial markets. Is the rally over, or is this a buying opportunity for gold bugs?

December gold futures advanced $11.50, or 0.62%, to $1,873.10 per ounce at 18:39 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold prices will settle the week down 0.81%, paring their year-to-date surge to below 24%.

Silver, the sister commodity to gold, is looking to build momentum with only ten days left in November. January silver futures tacked on $0.297, or 1.24%, to $24.345 per ounce. Like gold, the white metal posted a weekly loss of roughly 1.7%. Silver prices are on track for a 2020 gain of about 36%.

Although Treasury Secretary Steven Mnuchin confirmed on Thursday that he would allow several of the Federal Reserve’s emergency lending facilities to expire at the end of the year, he revealed that he and White House Chief of Staff Mark Meadows would be meeting with Republican leaders regarding fiscal stimulus and relief efforts. This comes as Senate Minority Leader Chuck Schumer (D-NY) and Senate Majority Leader Mitch McConnell (R-KY) agreed to restart talks over a new aid package that could cost $2 trillion.

But financial markets have barely reacted to both developments, signaling that they are confident the Fed will continue to support the recovery and that Washington will eventually come to an agreement.

Inflation remains a concern for metal investors, but optimism over Pfizer and Moderna’s mostly effective coronavirus vaccines has fueled record outflows in gold. The Bank of America reported that traders had removed $4 billion from gold markets since the duo announcements of the COVID-19 inoculations. Still, market observers believe the metals market will be supported by the length of time it would take to distribute, as well as the astronomical amount of spending and printing in the US and abroad.

A stronger greenback limited the gold’s gains at the end of the trading week. The US Dollar Index, which measures the greenback against a half-dozen currencies, picked up 0.11% to 92.40, from an opening of 92.34. The index will finish the week down 0.4%, adding to its year-to-date loss of 4.15%. A higher buck is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.

In other markets, January copper futures surged $0.086, or 2.69%, to $3.288 per pound. January platinum futures added $8.40, or 0.88%, to $959.90 an ounce. January palladium futures edged up $9.30, or 0.4%, to $2,329.10 per ounce.

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