Gold futures were rising early Friday, rebounding from a fall in the prior session, as bullion moved in step with hope for a U.S. coronavirus relief package in Washington that could provide a lift to buyers of bullion hedging against growing government budget deficits.
The status of those negotiations in Congress remains uncertain but investors appear to be positioning as if a deal could be struck soon even if details on the size and breadth of an additional relief package isn’t known.
House Speaker Nancy Pelosi, D-Calif., on Thursday said negotiations with Treasury Secretary Steven Mnuchin were “almost there,” but Senate Republicans have thus far been reluctant to support a spending plan of around $2 trillion. Senate Majority Leader Mitch McConnell, R-Ky., on Thursday refused to commit to a pre-election vote on an aid package.
Gold prices were knocked lower on Thursday, but were trading solidly higher above $1,900 Friday morning, after the settlement below that psychologically significant level.
December delivery GCZ20, +0.17% GOLD, -0.46% was heading $12.10, or 0.6%, to reach $1,916.80 an ounce, following a 1.3% skid on Thursday that also saw bullion touch an intraday low of $1,894.20. Gold was on track to gain four of the past five sessions, with a weekly advance of 0.5%, FactSet data show.
Silver for December delivery SIZ20, +0.26% SI00, +0.26% was adding 25 cents, or 1%, to reach $24.96 an ounce, after shedding 2.1% in the prior session. Silver is on pace to gain five of the past six sessions and is looking at a 1.3% weekly return.
“The rise in gold and silver is a technical rally after both of them managed to trade over hundred day moving average,” wrote Chintan Karnani, chief market analyst at Insignia Consultants, in a Friday note.
“Chances of additional US stimulus happening very soon is also lifting gold and silver,” the analysts wrote.
Gains in precious metals have come even as long-date bond yields have been climbing to around their highest levels since June, with the 10-year Treasury note yield TMUBMUSD10Y, 0.853% at 0.86% early Friday, compared with 0.744% last Friday afternoon. Government bonds can often compete with gold for haven demand and can attract greater demand when its yields rise.
However, gold this week has mostly moved in step with the U.S. dollar, which was down 0.2% on Friday, contributing to its 1% weekly decline thus far, as measured by the ICE U.S. Dollar Index DXY, -0.12%, a gauge of the buck against a handful of currencies of major developed countries.
Commodities traders have been focused on talk of further fiscal aid to U.S. corporations and workers, the coming 2020 U.S. presidential election on Nov. 3, and a resurgence of COVID-19 inside and outside the U.S.