Senate reaches deal on $2 trillion stimulus plan Gold plunged more than $15 in the short term to near the 1,600 mark

Financial markets gyrated at midday on Wednesday on news that the us senate had reached an agreement on a bipartisan stimulus package. At one point, U.S. stock futures pared losses and Japanese shares rose sharply on the news, but the impact of the good news quickly dissipated and U.S. stock futures fell again, while spot gold fell more than $15 in the short term and briefly approached the $1,600 an ounce mark.

The latest news is that the us senate has reached an agreement on a bipartisan stimulus plan. The stimulus measures are thought to be worth more than $2 trillion, with $250 billion going to unemployment benefits and $130 billion going to hospitals.

On March 24, the Wall Street journal, citing White House sources, reported that the trump administration and senate Democrats had reached an agreement on a massive stimulus package.

The move came after senior Democrats and Republicans said Tuesday they were close to a deal on a $2 trillion economic stimulus bill that would provide financial aid to unemployed Americans and help struggling industries.

According to the Associated Press, the economic rescue package under consideration is bigger than the 2008 bank rescue and 2009 stimulus packages combined.

“We finally have an agreement,” said senate majority leader mitch McConnell. Checks will be sent directly to families.”

McConnell said the two parties reached agreement on the largest bailout plan in history. Now is not the time to celebrate, but an important time; A vote is expected later on Wednesday to pass the COVID 19 economic stimulus bill.

U.S. stock futures pared losses after the news, while dow futures rose. The nikkei 225 indexes extended gains to more than 7 percent. The Aussie/us dollar rose more than 20 points to break the key 0.6000 level.

However, U.S. stock indexes then extended losses, with s&p 500 futures down 1.88% and dow futures down another more than 1%. Analysts noted that investors remain skeptical about the effectiveness of the deal.

Gold also fell as stocks weakened. Spot gold fell more than $15 in the short term to as low as $1602.40 an ounce.

Spot gold closed up nearly $70 on Tuesday. The move came after the federal reserve took unprecedented steps to help the us economy, which has been hit by the coronavirus outbreak, and stopped investors from rushing for cash. The fed said it would begin providing unprecedented credit support to households, small businesses and major employers to offset the “severe disruption” caused by the coronavirus outbreak.

Analysts said gold prices had been hit by short-term gains that were so large that some investors took profits.

But some big-name investment Banks, including Goldman sachs, remain bullish on gold’s future, with some analysts advising investors to buy on dips.

An article on Economies.com, a leading financial website, argues that unless gold falls below $1,599.10 an ounce and stays below that level, the bullish scenario will remain valid.

Analysts at b. Riley FBR said on Tuesday they expect gold to surge to $2,500 an ounce in the third quarter and stay there in the fourth quarter, given the unprecedented fiscal and monetary stimulus.

Goldman sachs reiterated its bullish stance on gold Tuesday, publishing a research note titled ‘the last time to buy gold.’

“As a result, we are likely to be at an inflection point, as we were in November 2008, when ‘fear-driven’ buying will begin to dominate liquidity-driven selling pressure,” Goldman analysts said. As a result, the near-term and long-term outlook for gold looks more constructive, and we are increasingly confident with a 12-month price target of $1,800 an ounce.”

Gold’s 2019 rally will continue, CPM Group said on Tuesday, with prices likely to hit new highs in the medium term due to the novel coronavirus crisis, geopolitical tensions and the U.S. election.

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