Gold eases as dollar steadies amid fading stimulus hopes

Gold prices declined, weighed down by a steady dollar and fading chances of a new U.S. fiscal stimulus package being finalised before the November elections.

Spot gold was trading 0.2 percent down at $1,898.29 per ounce by 0717 GMT, having hit a low of $1822.43 on Wednesday, its lowest since October 8. U.S. gold futures were 0.3 percent down at $1,902.40.

The dollar index steadied against its rival currencies, supported by rising coronavirus cases and scant progress towards the U.S. stimulus deal.      

U.S. Treasury Secretary Steve Mnuchin said he and House of Representatives Speaker Nancy Pelosi were far apart on another coronavirus economic relief package, and that a stimulus deal was unlikely to reach before the Nov. 3 elections.            

Still, many investors expect large stimulus after the election, which Democratic presidential candidate Joe Biden is increasingly expected to win. Biden has been seen as more likely to raise taxes on corporate profits and capital gains.

Risk sentiment is likely to remain weak amid surging COVID-19 cases. European nations are closing schools, cancelling surgery and enlisting student medics as overwhelmed authorities faced the nightmare of a COVID-19 resurgence at the onset of winter. The safe-haven metal's downside appears limited amid concerns that resurgence in the COVID-19 pandemic could lead governments to again shut down economies.

The European Union and Britain are set to prolong Brexit talks past a mid-October deadline to try bridge gaps holding up a new trade agreement. European Union leaders meeting in Brussels on Thursday will pressure Britain for concessions.

The greenback against a basket of currencies traded 0.1 percent up at 93.50, having touched a low of 93.01 on Monday, its lowest since September 21. The U.S. Treasury yields declined, with the benchmark 10-year note yield trading at 0.704 percent and the 30-year yield at 1.476 percent.

Investors now await the U.S. unemployment benefit claims, Philadelphia Fed Manufacturing Survey, import price index, export price index and NY Empire State Manufacturing Index for further insight on the strength of the economy.