Gold dips on US stimulus uncertainty
US treasury secretary Steven Mnuchin calls for funds allocated to Treasury to instead be available for Congress to reallocate
Gold prices fell on Friday after US treasury secretary Steven Mnuchin called for an end to some of the Federal Reserve’s pandemic lending, sparking uncertainty about stimulus programmes that have played a key role in reassuring financial markets.
Spot gold slipped 0.2% to $1,864.54/oz by 3.59am GMT and was headed for a second week of decline. US gold futures were up 0.1% at $1,863.80/oz.
“If the Fed does start shrinking its assistance programme that could be a bit of headwind for gold again. The monetary debasement argument that has supported gold could weaken,” said Lachlan Shaw, National Australia Bank's head of commodity research.
In a letter, Munichin told Fed chair Jerome Powell that $455bn allocated to Treasury under the CARES Act should be instead available for Congress to reallocate. His comments weighed on equities while helping the dollar halt its week-long slide.
Gold, considered a hedge against inflation and currency debasement, has gained 23% this year, benefiting mainly from unprecedented stimulus measures unveiled to cushion the pandemic impact.
“It’s going to be a huge bumpy ride [for gold] waiting for stimulus to come in,” said Stephen Innes, chief global market strategist at financial services firm Axi. “It is now looking at $1,900 into year-end.”
Bullion was down 1.3% for the week as promising Covid-19 vaccine trials dimmed the metal’s appeal.
Silver was flat at $24.09/oz. Platinum fell 0.2% to $949.78/oz, while palladium eased 0.2% to $2,321.05/oz.
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