Another week of Lost Shine As Dollar Parties instead of Investing.com

By Barani Krishnan

Investing.com – It’s another week of lost brilliance for gold at the expense of a dollar bill, the strength of which could hardly be explained by the devaluation of the currency expected from the $ 2 trillion coronavirus stimulus proposed by President-elect Joe Biden.

US markets have turned in a red sea towards Friday’s close, from the pitiful December figures for everything from retail sales to producer price index, production and consumer sentiment. To join the sad party was gold, which should be the “safe haven” – or hedge or panacea, whatever you call it – that.

at New York’s Comex, Friday’s official session stood at $ 1,829.90 an ounce, down $ 21.50, or 1.2%. Although the benchmark gold futures contract fell just 0.3% in the week, that loss added to last week’s 3.2% drop – giving the precious metal its worst two consecutive weeks since November.

Even more remarkable than the fall in gold was the autonomous dollar party amid the darkness of stocks and commodities.

Supposedly a paradise in itself, the, compared to a basket of six other major currencies, rose 0.6% on the day to show a reading of 90.7. The dollar started the year below 90, but could rise above 91 next week, some Forex traders said.

The dollar was atypical on Friday, despite declining yields on benchmark-linked securities, whose resurgence last week was the catalyst for the dollar’s return.

But what made it all the more bizarre was the dollar’s challenge to the growing US deficit and the debt forecast of the Biden government’s fiscal plans to combat Covid-19. The $ 1.9 trillion stimulus announced by the president-elect on Thursday is not expected to be the last of the year, by any means.

Typically, when market support spending like this is announced by the leadership, investors’ risk appetite reaches a feverish peak, pushing stocks for commodities, including gold, to highs as the dollar falls.

Still, there may be reason for Friday’s dismay in the markets, with Wall Street reflecting on Washington political rumors that Biden’s stimulus may still encounter resistance in the Senate, despite the simple majority his Democratic Party commands.

However, the dollar’s performance – even with the likelihood of a reduced stimulus – is logical, especially with Federal Reserve officials spending the entire week to deny any speculation of a soon reduction in relief measures or an imminent increase in rates interest rates close to zero.