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Gold Down, Focus on Georgia Runoff Election

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·2 min read
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By Gina Lee

Investing.com – Gold was down on Tuesday morning in Asia, with investors awaiting the results of a runoff election in the U.S state of Georgia that will indicate the likelihood of further U.S. stimulus measures.

Gold futures edged down 0.18% at $1,943 by 11:56 PM ET (4:56 AM GMT), but remained above the $1,900 mark. Prices rose more than 2% during the previous session, boosted by rising number of global COVID-19 cases and the ensuing lockdowns, lower U.S. real yields, and a weaker dollar.

The dollar, which usually moves inversely to gold, was down on Tuesday.

The two Senate seats up for grabs in the Georgia election will decide control of the chamber, and the ease with which President-elect Joe Biden can push his agenda, such as rewriting the tax code to boosting stimulus, when his administration takes office later in the month.

The U.S. Federal Reserve is also due to release the minutes from its December policy meeting on Wednesday. Cleveland Federal Reserve Bank President Loretta Mester said on Monday that monetary policy will stay accommodative for “quite some time,” ahead of the release.

The number of global COVID-19 cases continues to rise, with U.K. Prime Minister Boris Johnson on Monday ordering a new national lockdown in his country has also seen investors turn to the safe-haven asset.

Some investors including Oanda Corp. senior market analyst Craig Erlam warned that the spread of Covid-19 during the holidays and tighter restrictions will have a significant toll on the economy. However, the impact will mostly be consigned the first quarter of the year as vaccine rollouts continue.

“Gold burst through $1,900 to start the year, with a softer dollar giving the yellow metal the kick it craved.” Following its move toward $1,945, and with the outlook for the dollar looking no better, “another run at $2,000 suddenly looks a matter of time,” Erlam told Bloomberg.

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