Gold price steadies as investors await outcome of U.S covid-19 relief bill

Gold prices in the U.S regained stability as the dollar index held steady against other foreign currencies amidst further developments on a new US covid-19 relief bill.

Spot gold was little changed at $1,881.59 per ounce, after gaining 1.1 per cent in the previous session, its biggest one-day gain since late August while US gold futures were up 0.2 per cent at $1,886.60.

Nancy Pelosi, speaker, U.S House of Representatives, had earlier disclosed that lawmakers unveiled a $2.2 trillion relief bill but it wasn’t specified when there would be a vote on the proposal.

 In the wake of this development, investors of the precious yellow metal are sceptical about the upcoming direction of the market as a weaker dollar makes gold cheaper for holders of other currencies while a stronger dollar would result in gold price increase.

Harshal Barot, a senior research consultant for South Asia at Metals Focus explained that there is an uncertainty in the market pertaining to the US elections and the possibility of a fresh US stimulus, adding that given these uncertainties the overall trade in the market is likely to be ruffled. “Leading up to the U.S elections we could see this volatility continue before the gold market could get a definite direction on either side,” he added.

Wang Tao, a technical analyst asserts that on the technical front, spot gold could break a resistance at $1,886 and rise to $1,911 per ounce, having failed twice to break a support at $1,855.

Gold, viewed as a hedge against inflation and currency debasement, has risen over 20 per cent in the market this year, mainly supported by unprecedented stimulus measures by governments and central banks worldwide to revive their coronavirus-ravaged economies.