Gold price slides nearly 2% on dollar rally, IMF silver lining

New York (Oct 13) - Gold fell as much as 1.9% on Tuesday, hitting below $1,900 an ounce, as the dollar rallied on an impasse over U.S. stimulus and as investors latched onto a slightly less stark economic report card from the International Monetary Fund.

Spot gold fell 1.7% at $1,890.01 per ounce by 10:33 a.m. EDT (1433 GMT). U.S. gold futures lost 1.8% to $1,893.70.

“The stagnation in Washington over the next stimulus package continues to pressure assets like gold that were relying on the weakness in dollar for the next wave of support,” said David Meger, director of metals trading at High Ridge Futures.

“The IMF and other agencies like U.S Federal Reserve have also noted that recovery has taken place a little quicker than they originally anticipated, so that would lead us to believe that there could be a need of lesser stimulus worldwide.”

The dollar jumped 0.4% against rivals, making gold expensive.

The IMF said forecasts for the global economy were “somewhat less dire” as wealthy countries and China rebounded more quickly than expected.

U.S. House Speaker Nancy Pelosi said the latest coronavirus stimulus package offer by President Donald Trump fell short of what the American people need.

“Gold has been toyed with” during negotiations for the fiscal stimulus deal, with the latest deadlock “taking away some of the short term bullish drivers we anticipated,” said Edward Moya, a senior market analyst at OANDA.

“But all that means is that we’re going to get the stimulus later, probably early next year and that will lead to higher gold prices.”

Gold, considered a hedge against inflation and currency debasement, has risen 25% this year amid unprecedented global levels of stimulus during the pandemic.

Other metals too joined the slide, with silver diving 3.8% to $24.15 per ounce, platinum falling 0.8% to $866.03, and palladium shed 2.8% to $2,334.18.

Reuters

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