Gold futures traded lower Wednesday, adding to losses seen after President Donald Trump announced on Tuesday that he had halted talks with congressional Democrats over another fiscal stimulus package before later calling for action on a number of individual aid measures.
December gold dropped $18.60, or 1%, to $1,890.20 an ounce, while December silver fell 21.1 cents, or 0.8%, to $23.71 an ounce.
Gold fell Tuesday and then extended losses after Trump accused Democrats of negotiating in bad faith and said he would halt talks on a stimulus package until after the November election, sparking a sharp selloff in stocks. A few hours later, Trump said he would be willing to sign piecemeal aid measures, including $1,200 stimulus checks to households and relief for airlines and small businesses.
Analysts said that despite the change in course, prospects for any sort of fiscal relief ahead of the election appeared unlikely, adding to deflationary pressures. And while gold is often viewed as a haven during periods of uncertainty, a rise by the U.S. dollar squelched demand for the yellow metal.
“At first glance, the fact that no new measures to stimulate the economy will be implemented in the near future should really have been good news for gold,” said Daniel Briesemann, commodity analyst at Commerzbank, in a note. “However, the price slide in late trading is due to the appreciating U.S. dollar, which apparently was in demand as a safe haven — despite everything — directly after Trump’s comments.”
A stronger dollar can be a drag on gold an other commodities priced in the unit, making them more expensive to users of other currencies.
The ICE U.S. Dollar Index was flat Wednesday after rising as much as 0.4% in the previous session. The index, a measure of the dollar against a basket of six major rivals, is down 0.2% for the week.