Gold is rallying principally on reiterated fiscal incentive and relief expectations, triggering inflation concerns. But a strengthening US dollar put a cover on the metals market.
February gold futures rose $14.80, or 0.81%, to $1,850.10 per ounce at 15:55 GMT on Monday on the New York Mercantile Exchange’s COMEX division. Gold prices are coming off a weekly decline of around 2.5%, closing the first trading week of 2021 under the $1,900 level.
Silver, the relative commodity to gold, is rising on Monday after slipping approximately 7% last week. March silver futures rose $0.633, or 2.57%, to $25.27 an ounce.
Although Washington has still flowed in political turmoil as Democrats try to blame President Donald Trump for a second time, investors concentrate on President-Elect Joe Biden and his trifecta of power. Traders are confident that his majority control can point to more stimulus spending as the US economy wheels from the COVID-19 epidemic.
Following last week’s unfortunate December jobs report, the financial markets are craving for more federal government relief
With the Democrats asking the final coronavirus legislation a down payment, legislators will probably put more spending measures.
At the same time, investors are also afraid of the inflationary influence of this deficit-financed spending. There are already indications that inflation is increasing, with food prices climbing to their highest levels in six years.
A strengthening dollar pressed on gold prices. The US Dollar Index, which gauges the dollar versus a basket of currencies, elevated 0.38% to 90.44, from an opening of 90.03. A stronger dollar is dangerous for dollar-pegged commodities because it addresses it more costly for foreign investors.
On the data front, as stated by the Federal Reserve Bank of New York, consumer inflation expectations increased to 3% in December, up from 2.96% in November.
Overall, the resurgence in coronavirus cases extends to influence the wider economy, with the US equating more than 250,000 new infections per day. This has occurred in more states forcing lockdowns, and there are worries that a Biden administration would establish federal mandates to restrict the spread of respiratory disease.
In other metal markets, March copper futures slid $0.117, or 3.18%, to $3.5565 per pound. March platinum futures crashed $34.10, or 3.18%, to $1,037.20 an ounce. March palladium futures rised up $5.50, or 0.23%, to $2,370.50 per ounce.