Gold Picks Up From Nine-Month Low – Weak Dollar, US Stimulus Support
At the start of a fresh trading week, gold prices are improving after touching the lowest levels seen in nine months, supported by a weakness in the US dollar and rising hopes for the next round of fiscal stimulus measures in the US to be implemented soon. At the time of writing, GOLD is trading at a little above $1,708.
An improvement in the market sentiment has weakened the safe haven appeal of the US dollar, sending investors towards riskier instruments, over hopes for economic recovery. As we know, the greenback shares a negative correlation with gold as a weaker dollar makes the yellow metal more affordable for holders of other currencies.
While a risk-on sentiment typically dents the safe haven appeal of the precious metal and causes it to trade bearish, gold is finding support over expectations for more stimulus measures to be unleashed in the US soon. President Biden’s proposal for $1.9 trillion worth of coronavirus relief measures is making progress, with the US Senate passing the stimulus bill without Republican support.
However, gains in the yellow metal remained limited on the back of strong economic data releases from around the world, which are reinforcing markets’ expectations that the global economy could be working its way back up from the pandemic-inflicted damage. A stronger than expected employment report from the US revealed an improvement in the labor market even as China revealed a sharp pick-up in exports during February.
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