Gold extends decline on dollar strength as stimulus faces debate

Getting support: A goldsmith arranges jewellery at his shop in Najaf, Iraq. The metal is staying above US$1,800 an ounce and is expected to receive support from massive stimulus packages from central banks and governments. — Reuters

NEW YORK: Gold extended declines on a stronger dollar and the currency’s outlook, while investors assess the timeline for the US stimulus package.

Former Federal Reserve chair Janet Yellen is expected to affirm the US’ commitment to market-determined exchange rates when she testifies on Capitol Hill today, and she will make clear the US doesn’t seek a weaker dollar for competitive advantage, according to a report from the Wall Street Journal citing people familiar with the preparation. The dollar has climbed in the past two weeks.

Yellen’s confirmation hearing as Treasury secretary is scheduled for Jan 19 in front of the Senate Finance Committee, the day before President-elect Joe Biden is sworn into office.

Bullion has dropped about 4% this year as US Treasury yields and the dollar advanced. Still, the metal is staying above US$1,800 an ounce and is expected to receive support from massive stimulus packages from central banks and governments. Biden is pushing for quick congressional action on his economic relief plan, but he risks slowing it down with a federal minimum-wage increase that Republicans and business groups have long fought.

Meanwhile, as the US death toll from Covid-19 neared 400,000, Anthony Fauci, the nation’s top infectious disease expert, said that Biden’s promise of delivering 100 million vaccine doses in 100 days is “absolutely a doable thing.”

Vaccinations in the US began Dec 14 with healthcare workers, and so far 13.7 million shots have been given, according to a state-by-state tally by Bloomberg News and data from the Centres for Disease Control and Prevention.

Spot gold fell 0.5% to US$1,819.77 an ounce by 9:03am in Singapore yesterday falling 1.1% last week. Silver and palladium and also declined while platinum was little changed. — Bloomberg

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