Gold prices are climbing higher on Tuesday after the US Congress finally passed the $900 billion coronavirus relief package after months of delay, negotiations and uncertainty. At the time of writing, GOLD is trading at a little above $1,877.
The safe haven appeal of gold received a boost as the relief package awaits Senate’s approval and becomes one step closer to rolling out more financial aid that can support the US economy. Increased fiscal stimulus weakens the currency and increases the appeal of safe haven assets as it drives investor confidence lower.
News of the next round of fiscal stimulus measures in the US has helped gold recover from the steep losses it experienced over the previous session when the US dollar had turned stronger against its major peers. Reports about the latest strain of coronavirus has sent investors towards the greenback, which shares a negative correlation with the yellow metal, which resulted in gold prices falling by around 1.3% on Monday.
Meanwhile, uncertainties about the economic impact of the latest strain of coronavirus discovered in the UK are also keeping gold prices supported for now. There are fresh fears among traders that the UK and other countries, especially across Europe, could impose tighter lockdowns and restrictions which could further damage their economies.