Market Nuggets
Lower chance of stimulus before the election weigh on gold price: Commerzbank
The U.S. dollar is seeing some strength as markets are pricing in a lesser chance for additional fiscal stimulus to be passed before the election, which is weighing on gold, according to Commerzbank. "One part in this is being played by the U.S. dollar, which has stopped depreciating for now. It seems in the U.S. that hopes of a new aid package for the U.S. economy being approved by Congress before the presidential elections are now gradually dwindling," writes Commerzbank analyst Daniel Briesemann. "After all, even if Democrats and Republicans were to reach an agreement soon, the majority leader in the Senate has already signaled that he will not permit any vote on this before the election." Gold's longer-term outlook remains positive as more stimulus is likely to be passed after the election. "If Biden becomes the new U.S. president and the Democrats win a majority in the Senate, a much bigger fiscal package could be set in motion – the talk is of $5 trillion. In principle, this should benefit gold," says Briesemann.
