Long gold hit! Pelosi admits the stimulus bill may not pass before the election. Gold just fell close to 1910!

On Thursday, the DOLLAR index rebounded to near 92.80. Spot gold fell quickly and briefly approached the $1,910 / oz barrier. A rebound in the dollar weighed on gold prices. Gold bulls were also hit by the long delay in a U.S. fiscal stimulus package, with House Of Representatives Speaker Nancy Pelosi saying it may not be passed in time for the U.S. presidential election.

On October 21 local time, Us House Of Representatives Speaker Nancy Pelosi said that it is possible to reach an agreement with Treasury Secretary Mnuchin on a stimulus package to deal with the impact of coVID-19, but it is unlikely to be passed by both houses of Congress before November 3.

After Ms. Pelosi’s latest round of talks with Mr. Mnuchin, White House Chief of staff David Meadows said On Wednesday that “progress has been made in the last 24 hours” and that the goal was to “reach some sort of agreement in the next 48 hours or so.” Mnuchin is understood to have proposed an overall stimulus package of $1.88 trillion, while Pelosi insisted on $2.2 trillion.

Ms Pelosi said a deal needed to be worked out with the Trump administration by the end of the week to pass legislation by next week, before election day on November 3.

Meadows said billions of dollars of differences remain. The main point of disagreement is Democrats’ desire to provide aid to state and local governments, especially in blue states where the epidemic is more severe. Tax increases on businesses and tax cuts for the poor, worth about $246 billion. Both are fiercely opposed by Republicans.

The two sides have spent months trying to reach an agreement to pass one of the last relief bills to ease the outbreak before the election. While the two sides have narrowed their differences over the overall bailout offer: the White House raised its offer to nearly $1.9 trillion, it is still below the $2.2 trillion the House approved in early October.

U.S. President Donald Trump said he doesn’t think House Speaker Nancy Pelosi and Senate Democratic leader Charles Schumer “will be willing to do anything right on the stimulus package for our great American workers, or our great America itself.”

The Trump administration and Democratic leaders are struggling to agree on a new coVID-19 stimulus package before the November 3 presidential election.

Expectations for a stimulus package before the election have cooled sharply, with U.S. stocks turning from gains to losses after Pelosi’s remarks. U.S. stock index futures continued to weaken on Thursday, with s&p 500 futures down nearly 0.9 percent at one point, hitting a two-week low.

Gold prices are at risk of further falls

Gold rose nearly 1 percent on Wednesday after hitting a more than one-week high on optimism that the NOVEL Coronavirus rescue program will be announced before the November 3 presidential election. Spot gold closed at $1,923.35 an ounce, up $16.95, or 0.89 percent, after peaking at $1,931.01 an ounce.

“Pelosi’s original deadline was Tuesday,” said Michael Matousek, chief trader at U.S. Global Investors. It’s been put off until Friday. Knowing that, people think deals will probably be done in the near future, so they start accumulating gold.”

However, the dollar rallied and gold fell sharply from its highs after Ms Pelosi said a stimulus package might not be passed before the election.

On Wednesday, the dollar index.DXY fell for a third straight day to close at 92.64, down 0.49 percent, after hitting an intraday low of 92.47, its lowest level since at least Sept. 2.

The dollar index.DXY rebounded to near 92.80 in Asian trading Thursday. Spot gold fell sharply in intraday trading on Thursday, touching as low as $1,910.56 an ounce.

Analysts said gold prices could risk further falls if a stimulus package is not agreed before the US election. And if the US stimulus bill is passed before the election, gold could rebound.

Gold briefly came close to its long-awaited target of $1,934.86 an ounce on Wednesday, but that level provided strong resistance and led to a pullback that investors need to be wary of afternoon trading, according to an article on Economies.com on Thursday.

If gold stays below $1,934.86 an ounce, that will weigh on prices and push them lower, with the first target at $1,901.80, According to Economies.com.

Yousef Abbasi, global market strategist at StoneX, said: “The market seems to be focused on the pre-election stimulus talks, which may not be going anywhere. “Republican senators have already rejected anything larger than their small deal, and all indications are that the prospects for a pre-election stimulus are still very slim.”

Senate Majority Leader Mitch McConnell told colleagues On Tuesday that he had warned the White House against reaching a large stimulus deal before the Nov. 3 election, the Washington Post reported, citing two people familiar with the matter.

McConnell suggested House Speaker Nancy Pelosi had not negotiated in good faith with Treasury Secretary Steven Mnuchin, and a deal could undermine the Senate’s plan to confirm Justice Barrett next week.

Steve Dunn, head of exchange-traded products at Aberdeen Standard Investments, said in a telephone interview with Kitco News that investors probably shouldn’t expect any major aid legislation before the November 3 U.S. election.

“Prior to the new stimulus bill, gold’s movement was largely determined by the DOLLAR index,” said Seekingalpha analyst Adam Hamilton.

Kevin Grady, President of Phoenix Futures and Options, said gold price movements are directly related to the stimulus measures because gold is driven by inflation. ‘The more the government prints money, the more the dollar depreciates,’ he added.

Goldman Sachs, the leading investment bank, said the chances of Congress passing a stimulus package before the November 3 election were slim with the most important issues still deadlocked.

Gold, seen as a hedge against inflation, currency depreciation and uncertainty, has risen more than 26 per cent this year, largely as a result of unprecedented global stimulus measures to cushion the economy from a coronavirus recession.

According to Commerzbank, gold is keeping a close eye on US stimulus talks, Brexit news and novel Coronavirus cases.

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