|   Commentary


  |   Commentary


Gold at 1-week peak on U.S. stimulus deal optimism

Gold prices rallied to a 1-week peak as optimism that U.S. lawmakers could reach agreement on a pre-election coronavirus relief package weighed on the dollar and bolstered the precious metal’s appeal.

Spot gold was trading 0.6 percent higher at $1,918.17 per ounce by 0925 GMT, having hit a high of $1922.84 earlier, its highest since October 13. U.S. gold futures were up 0.3 percent at $1,920.05.

The White House and Democrats in the U.S. Congress moved closer to an agreement on a fresh stimulus package on Tuesday as President Donald Trump said he was willing to accept a large aid bill despite opposition from his Republican Party. Negotiations will continue on Wednesday, an aide to top U.S. Democrat Nancy Pelosi said.

The dollar index hit a 1-month low against its rival currencies as investors awaited the outcome of the fiscal stimulus talks and as coronavirus cases spiked in Europe.

Worldwide COVID-19 cases crossed 40 million on Tuesday, with some parts of Europe imposing renewed lockdown measures.

The European Central Bank President Christine Lagarde stated that the ECB will maintain an accommodative policy in response to the ongoing coronavirus crisis. She also said that about 590 billion of the ECB’s 1,350 billion euro asset purchase programme had been committed so far and that this programme was helping to lower long-term interest rates.

Data released earlier in the day showed Australia’s retail sales fell 1.5 percent in September from the month before, although sales during the September quarter climbed a solid 6.8 percent from a year ago. Separate data showed job vacancies rose by over 6 percent last month with gains in each state and territory.

The Reserve Bank of Australia is widely expected to further cut the cash rate to 0.1 percent at its November 3 meeting and expand its bond-buying programme to include long-dated debt.

The greenback against a basket of currencies traded 0.3 percent down at 92.82, having touched a low of 92.68 earlier, its lowest since September 4. The U.S. Treasury yields rose, with the benchmark 10-year note yield trading at 0.813 percent and the 30-year yield at 1.624 percent.

Investors now await the Fed's Beige Book and Fed's Brainard speech for further insights on the strength of the U.S. economy.

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