By Barani Krishnan
Investing.com - Gold rose in Friday’s trade but settled down a second week in a row as the yellow metal tried to find a floor after the White House and Congress hit the pause button on the Covid-19 stimulus drama, suggesting a major relief will be passed only after the Nov. 3 U.S. election.
Gold futures for December delivery settled at $1,905.20 on New York's Comex, up 60 cents, or 0.03%. For the week though, it was down 0.1%, following through with the previous week’s 1% drop.
Spot gold, which reflects real-time trades in bullion, was flat at $1,904.10 by 2:40 PM ET (18:40 GMT). Bullion also showed a 0.3% gain on the week versus a decline of 1.6% from the week earlier.
White House officials, including Chief of Staff Mark Meadows and Press Secretary Kayleigh McEnany, said negotiations for a stimulus with Nancy Pelosi, speaker of the opposition-led Congress, have virtually ended after two weeks of inconclusive talks.
U.S. Treasury Secretary Steven Mnuchin, who was directly involved in negotiations with Pelosi, said significant differences remained between the two sides.
Congress approved a Coronavirus Aid, Relief and Economic Security (CARES) stimulus in March, dispensing roughly $3 trillion as paycheck protection for workers, loans and grants for businesses and other personal aid for qualifying citizens and residents.
Democrats have been locked in a stalemate since with President Donald Trump’s Republican party on a successive package to CARES. The dispute has basically been over the size of the next relief as thousands of Americans, particularly those in the airlines sector, risked losing their jobs without further aid.
Buyers plowed into gold earlier this week on speculation that the Trump administration could bridge the gap between its $1.9 trillion offer and the $2.2 trillion sought by Pelosi and the Democrats. But as the week dragged on, both sides dug their heels in, negating any likelihood for a deal ahead of the Nov. 3 presidential election, in which Trump faces Democrat candidate Joe Biden.
Trump, reinforcing the stance of his administration and the Republicans, tweeted on Friday that he would never fund Democratic-run states under the stimulus.
Despite the standoff, gold prices weren’t tanking as investors were pricing in the possibility of a huge Biden win in the election, based on polls, and the likelihood of a major stimulus issued thereafter, analysts said.
“History shows that almost every government struggling with instability does the same thing: Spend money,” said Adam Button, managing editor at ForexLive.
“The case for gold is overwhelming. We're still in a seasonally weak spot but if there's some weakness in November, it will be time to buy. If not, buy in December at any price.”
Comex gold hit record highs of nearly $2,090 an ounce in early August as speculation for a second round of CARES peaked then. However, the yellow metal fell almost $250, or 12%, from those highs in recent weeks as the speculation for another Covid-19 deal fizzled and the dollar rallied instead.
The Dollar Index, which pits the greenback against six major currencies, was down 0.2% at 92.8 on Friday after standing as high as 94.8 in September.