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James Hyerczyk
Comex Gold

Gold futures finished marginally lower and consolidated in a tight range for a third week with investors held hostage by the lack of movement toward a fresh government fiscal stimulus plan. The price action was choppy with gold rising along with hopes for a deal falling when those hopes were dashed.

It wasn’t the actual stimulus headlines that drove the price action, but what they did to the U.S. Dollar. When stimulus was on the dollar weakened, driving up foreign demand for the dollar-denominated commodity. When both sides nearly walked away from negotiations, the greenback rose, pressuring gold prices.

Last week, December Comex gold settled at $1905.20, down $1.20 or -0.6%.

Gold is viewed as a hedge against inflation and currency debasement spurred by stimulus measures.

Stimulus Update

It doesn’t make sense to retrace the stimulus headlines from last week. All one has to know is that they changed nearly every day and sometimes twice a day. Unless there is fresh news over the weekend, we think Friday’s comments will set the tone early this week.

On Friday, U.S. House of Representatives Speaker Nancy Pelosi said another round of COVID-19 aid was still a possibility before the November 3 elections, but that President Donald Trump would have to get reluctant Republicans on board if he wants a deal.

Meanwhile, Trump and Treasury Secretary Steven Mnuchin countered that Pelosi must compromise to get an aid package, saying significant differences remained between the Republican administration and Democrats.

So it looks like another stalemate has been reached, but we expect to see more adventures next week.

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Traders Could Shift Focus to Presidential Election

Gold traders are likely to shift their focus to the November 3 U.S. presidential election after President Donald Trump and Democratic challenger Joe Biden offered sharply contrasting views on the pandemic at the final presidential debate on Thursday.

Weekly Forecast

Gold could be stuck in a holding pattern over the near-term with some uncertainty attached to the election although the polls seem to be leaning toward a Joe Biden victory. Traders also expect a stimulus package by the end of year regardless of who wins the election.

Longer-term, the market is well supported by accommodative central bank policies. Over the short-run, however, the market could remain rangebound until the stimulus package is approved.

For a look at all of today’s economic events, check out our economic calendar.
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