Gold rebounds from 2-month low on U.S. stimulus hopes
Gold prices nudged higher on renewed hopes of more U.S. stimulus measures, although it was on track for its biggest weekly decline in more than a month weighed down by a stronger dollar.
Spot gold was trading 0.3 percent higher at $1,874.05 per ounce by 0702 GMT, having hit a low of $1848.84 on Thursday, its lowest since July 22. But the metal was set for a weekly loss of 4 percent so far. U.S. gold futures were down 0.1 percent to $1,875.50.
The dollar dipped from a 2-month peak against its rival currencies as renewed hopes of fresh U.S. stimulus eased investors’ concerns about its economic recovery.
News that Democrats in the U.S. House of Representatives are working on a $2.2 trillion coronavirus stimulus package that could be voted on as soon as next week and that House Speaker Nancy Pelosi reiterated she is ready to negotiate on it with the White House boosted investor risk sentiment.
Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin stated that hundreds of billions of dollars in unused coronavirus aid funds could be reallocated to help U.S. households and businesses if lawmakers approve.
Markets also cheered on upbeat U.S. new home sale data, which showed sales of new single-family homes increased to their highest level in nearly 14 years in August, suggesting the housing market continued to gain momentum. However, separate data showing the number of Americans filing new claims for unemployment benefits unexpectedly increased last week underpinned views that the economic recovery in the U.S. economy was running out of steam.
U.S. new home sales rose 4.8 percent to a seasonally adjusted annual rate of 1.011 million units last month, the highest level since September 2006, while initial claims for state unemployment benefits rose 4,000 to a seasonally adjusted 870,000 for the week ended Sept. 19.
The greenback against a basket of currencies traded 0.1 percent down at 94.23, having touched a high of 94.59 on Thursday, its highest since July 24. However, it was on track for its best week since early-April, up 1.4 percent so far.
The U.S. Treasury yields eased, with the benchmark 10-year note yield trading at 0.671 percent and the 30-year yield at 1.4107 percent.
Investors now await the U.S. durable goods data and Fed William's speech for further clues on the strength of the economy and monetary policy outlook.