In Asian session on Tuesday, the DOLLAR index was little changed at around 90.15. Spot gold maintained its short-term upward trend, with the price now approaching $1,885 an ounce. On the news that the US House of Representatives has just passed a new $900bn bail-out bill, positive progress on the fiscal stimulus package is helping to boost demand for gold. In addition, a novel Coronavirus variant has recently attracted attention in the UK. According to WHO, the data reported in the UK show that the transmissibility of this novel coronavirus variant has been enhanced.
The US House of Representatives on December 21 passed a $900 billion COVID-19 relief bill that would provide much-needed financial assistance to speed up vaccine distribution and help small businesses, the unemployed and frontline health workers hit by the COVID-19 pandemic. The US House of Representatives passed the epidemic relief plan by a vote of 359-53.
The bill includes a $600 cash payment for most Americans, a $300 weekly supplement to unemployment insurance, a new round of subsidies for hard-hit American businesses, and driver funds for schools, health insurance workers and rent-paying tenants. The bill will now go to the Senate for approval, which is expected to pass quickly if no senators oppose it.
U.S. Treasury Secretary Timothy Mnuchin told CNBC Monday that Americans eligible for direct payments under the new Novel Coronavirus Relief Act will see the money paid into their bank account within days.
According to a new report from CNBC, the US House of Representatives has approved a $900 billion Novel Coronavirus bailout and a $1.4 trillion government funding bill that will keep the US government open until September 30 next year. The Senate plans to approve the omnibus package later. The bill includes $300 a week in federal unemployment benefits, a $284 billion payroll Protection Program (PPP) loan, $600 per person direct payments, and $8 billion for COVID-19 vaccine distribution, among many other provisions.
Bloomberg reports that the U.S. House of Representatives has approved a $900 billion Novel Coronavirus rescue plan that economists say should help the U.S. economy avoid a double-dip recession by 2020.
Ole Hansen, head of commodity strategy at Saxo Bank, said: “We are likely to see some wild swings in the next few weeks, but the bullish fundamentals for gold remain. “The factors driving gold higher in 2020 will not disappear in 2021.”
Daniel Pavilonis, senior commodity broker at RJO Futures, said investors will turn to gold as a hedge against rising inflation in 2021 as further stimulus measures and a weak dollar affect consumer prices.
Stephen Innes, chief global market strategist at Axi, a financial-services firm, said that with fiscal stimulus in place, gold was likely to close above $1,900 an ounce by the end of the year and could even climb to $1,925.
If you combine fiscal stimulus with optimism that the Fed will curb long-term Treasury yields, gold will be supported through March 2021, Innes said. After last week’s meeting, the Fed pledged to continue its bond-buying program and keep interest rates low until the U.S. economic recovery takes hold.
Lukman Otunuga, an analyst at FXTM, said gold has gained nearly 7 percent so far this month and could expand further if it closes above $1,900 an ounce.
Aberdeen Standard Investments wrote in a report that gold investors should not give up on the precious metal as the epidemic will continue to spread through most of 2021, the US economy will need further support and gold is expected to break through $2,000 an ounce again in the coming year.
Standard Investments Aberdeen said: “As things stand, the new pandemic bill will not be the last because we face structural problems that will haunt us in the coming year from an economic perspective. “Interest rates will not rise next year and that will be important support for precious metals.”
Who says novel Coronavirus variant with enhanced viral transmission in the UK
In addition to the frog of the latest positive developments of fiscal stimulus in the US, gold was also given a boost by novel Coronavirus mutation in the UK announcing a lockdown in an attempt to contain the outbreak.
Novel Coronavirus variant is spreading rapidly across London and the south-east of England and experts say it is 70 per cent more contagious than the original virus strain. Currently, 265 people per 100,000 people in the UK have been diagnosed with COVID-19.
At a press conference on December 19 local time, Prime Minister Johnson said that the number of confirmed cases in the UK had soared in the past two weeks thanks to a new variant from novel Coronavirus, which scientists believe is 70 per cent more contagious than the original strain. Mr Johnson said London and the south-east and east of England would rise from the current level three to level four for two weeks from December 20, in line with the widespread “foot restraints” that England introduced in November.
The government’s scientific adviser had previously said the mutation was the main reason for the surge in hospital admissions in December. Johnson also stressed that there is no evidence that the mutated virus is more lethal or that the COVID-19 vaccine is less effective against the mutated virus.
On December 19 local time, The British Health Secretary Hancock said that the Novel Coronavirus new strain found in the UK had got out of control and the British government must take control of it and have the responsibility to take action.
Novel Coronavirus variants are being explored by a number of research institutes in the UK to explore the effects of novel coronavirus variants on transmission, pathogenicity and antibody response, maria van Kochhoff, technical director of WHO’s Health Emergency program, said on December 21. At present, data reported in the UK show that the novel Coronavirus variant has an enhanced transmissibility and the transmission index has increased from 1.1 to 1.5. In the UK, it is being determined how much of the influence comes from the irus variant itself and the individual behavioral differences after infection with this variant.
Maria van Kohof said the novel Coronavirus variant found in the UK has been sequenced in several countries, including Australia, Iceland, Italy, the Netherlands and Denmark.
Nine cases have been reported in Denmark and one each in the Netherlands and Australia. In addition, Italy has reported 1 case of the imported British COVID-19 variant.
Who Director-General Tedros Adhanom Ghebrezek said the UK reported that the mutated virus was more transmissible, but there was no evidence that it was more likely to cause severe illness or death. Who is working with scientists to understand how mutations affect the behaviour of the virus.
Flights from The UK to Spain, India and Hong Kong have been suspended after the discovery of the novel Coronavirus strain. More than 40 countries around the world have imposed entry bans on the UK. Concerns about the rapid spread of the newly discovered coronavirus strain in the UK have investors looking for a safe haven in gold.
France has announced it will close the Franco-British border for 48 hours, meaning trucks and ferries cannot leave the port of Dover. In addition to France, other countries that have banned Entry to the UK include Belgium, Canada, Germany, Ireland, Italy, Portugal, Romania, Russia, and Switzerland.