Another week of shine lost as parties to the dollar instead of Investing.com

By Barani Krishnan

Investing.com – Another week of lost shine for gold at the expense of a dollar whose strength could hardly be explained with the currency depreciation expected from the coronavirus stimulus proposed by President-elect Joe $ 2 trillion Biden.

US markets swirled in a sea of ​​red towards Friday’s close after dismal December figures for everything from retail sales to the price index to producer, manufacturing and consumer confidence. Joining the sad part was gold, which was meant to be the “refuge” – or hedge or panacea, whatever you called it – of it.

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

Even more remarkable than the fall in gold was the dollar’s self-sustaining part in the sluggishness of stocks and commodities.

Supposedly a haven in its own right, the, pitted against a basket of six other major currencies, rose 0.6% on the day to a reading of 90.7. The greenback started the year below 90 but could head above 91 by next week, some traders say.

The dollar was an outlier on Friday despite a drop in bond yields associated with the benchmark, the resurgence of which last week was the catalyst for the greenback’s comeback.

But what made it even more bizarre was the dollar’s challenge to the soaring U.S. deficit and debt projected by the Biden administration’s budget plans to fight Covid-19. The $ 1.9 trillion stimulus announced by the president-elect on Thursday is unlikely to be the last of the year, by far.

Typically, when market support spending like this is announced by executives, investor risk appetite peaks, propelling commodity stocks, including gold, to new heights while that the dollar plunges to a low.

Still, there could be a reason for Friday’s dismay in markets, with Wall Street reflecting on discussions in Washington’s political vineyard that Biden’s revival could still meet resistance in the Senate despite his Democratic party’s simple majority. ordered.

Yet the performance of the dollar – even with the likelihood of a weakened stimulus – flies in the face of logic, especially with Federal Reserve officials spending the entire week denying any speculation about an upcoming cut in measures. relief or an impending hike in interest rates close to zero.