Market Sentiment Weakens Gold, But Fiscal Stimulus Hopes Support
Arslan Butt • 1 min read
Gold prices are weakening on Wednesday as markets continue to trade with a risk-on sentiment over optimism about possible vaccines that can bring an end to the coronavirus pandemic and drive economic recovery soon. At the time of writing, GOLD is trading at a little above $1,811.
Even as the number of fresh infections continue to rise, the US is gearing up to rollout vaccines to its citizens by as soon as the mid of this month. Meanwhile, Pfizer and Moderna have applied for emergency approval to rollout their vaccines against COVID-19 across the EU. A swift rollout of the vaccine could help stem the economic downturn and aid recovery across the world.
While gold’s safe haven appeal has taken a hit over the optimism surrounding the vaccines, losses remain limited due to rising hopes for fresh fiscal stimulus in the US. For the first time since the presidential election, negotiations resumed between US Treasury Secretary Steven Mnuchin and House of Representatives Speaker Nancy Pelosi on issues related to more financial aid.
Rising expectations for more fiscal stimulus in the US are lending some support to gold even as the market sentiment improves and investors move towards riskier instruments. Fed officials, senators and other government officials have called for more relief measures to offset the damage caused to the US economy in the wake of the coronavirus pandemic, raising hopes among traders that the coronavirus relief bill could get finalized soon.