Gold Down Over Stimulus Caution

(C) Reuters.

Gold Down Over Stimulus Caution

By Gina Lee

Investing.com – Gold was down on Tuesday morning in Asia, ahead of a self-imposed Tuesday deadline to pass the latest U.S. stimulus measures.

Gold futures were down 0.39% at $1,904.15 by 12:47 AM ET (4:47 AM GMT), remaining above te $1,900 mark. Investors were cautious ahead of the deadline and diminished the yellow metal’s appeal as a hedge against inflation. Stocks, which usually move in the opposite direction to gold, were also mostly down on Tuesday.

House of Representatives Speaker Nancy Pelosi, who set the Tuesday deadline, and Treasury Secretary Steve Mnuchin “continued to narrow their differences” over the measures, Pelosi’s spokesman Drew Hammill tweeted on Monday.

Pelosi was also hopeful that there will be “clarity” on whether the measures could be passed before the Nov. 3 presidential election, the tweet added.

Federal Reserve Vice Chairman Richard Clarida on Monday highlighted the urgent need for the stimulus measures to be passed. Although the U.S. economy is rebounding strongly after taking a big hit thanks to COVID-19, he warned that it could take another year for the economy returns to pre-crisis levels and take even longer for the labor market to recoup lost ground.

Across the Atlantic, Brexit talks between the U.K. and the European Union (EU) frayed after U.K. chief negotiator David Frost warned that the country saw no basis to resume trade talks unless there is a fundamental change in the EU’s approach. Frost’s comments dashed earlier hopes that negotiations between the two parties would resume.

European Central Bank President Christine Lagarde said that the central bank will maintain an accommodative policy in order to respond to the ongoing COVID-19 pandemic. The number of global cases topped 40 million as of Oct. 20, according to Johns Hopkins University data.