It was a volatile week for gold. After days of trading down the line, the precious metal is ready to end the week with gains in Asia.
The recent movement became the trend as investors are in a “wait and see” attitude towards the $1.9 trillion stimulus package.
In the latest charts, gold futures hiked by 0.15% to $1,844.03 at the regular session’s morning trading in the continent.
On the other hand, it failed to gain the same momentum in New York COMEX. The contracts for February delivery traded at $1,837.90 per ounce, down by 0.4% or $7 per ounce for the day.
This is the contract’s sixth consecutive fall during the week, taking away roughly $29 or 1.5% off the benchmark during the volatile week.
According to news, the new US President called the attention of the Republicans after his proposal was met with cold shoulders by the party.
Another factor supportive of the metal price is the US economy’s contraction for 2020. The country recorded a 3.5% fall in the indicator, its worst performance since 1946.
Experts noted that the economy would remain traversing a difficult path through the first half of the year amid flagging economic indicators.
The new administration is under the pressure of combating the double burden of high unemployment rate combined with the poverty rate.
This result increases appetite for the bullion being the best bet against inflation.
But the Dollar Cannot Provide Support
Unexpectedly, the weakening dollar did not provide support for gold in Wednesday’s trading session in the United States.
The USD index tracks the performance of the greenback against other entities in the basket. Today it dropped the previous day’s gains after falling 0.3%.
Such an event is usually supportive of both spot gold price and futures contract.
However, the conservative hike is outsmarted by the surge in US 10-year Treasury bonds which rose by 5% on Thursday.
This is the benchmark’s first hike for the week after recording lukewarm data in the past four days.
According to an expert from TD Ameritrade, gold’s movement is now more heavily leaning towards its characteristic as a safe haven rather than as an inflation-hedging asset.
Meaning, bulls are now increasingly reliant on the movement of Treasury yields rather than on rising inflation expectations.
For the record, the Fed decided to keep interest rates to nearly zero earlier in the week. They remain accommodative of rising prices.
