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Gold retreats as dollar gains on U.S. stimulus doubts

· Gold fell on Thursday as the dollar recovered some lost ground after doubts emerged on whether U.S. lawmakers could reach agreement on a new coronavirus aid package before the November presidential election.

· Spot gold fell 0.3% to $1,919.65 per ounce by 0750

· GMT, after hitting more than a one-week high on Wednesday. U.S. gold futures slipped 0.3% to $1,923.00.

· “Without stimulus, there’s a lot of uncertainty and that’s driving people to be a bit cautious and move towards the U.S. dollar,” said Michael Langford, executive director at corporate advisory and consultancy firm AirGuide.

· Stimulus talks between U.S. lawmakers faced a setback on Wednesday when President Donald Trump accused Democrats of being unwilling to craft a compromise on aid.

· The news dented risk sentiment and lifted the dollar against its rivals, making gold more expensive for holders of other currencies.

· “The Fed is not going to ease anymore, but there’s no scope for tightening and that could put a floor under gold,” said DailyFx currency strategist Ilya Spivak, adding that the metal was unlikely to rally or fall “catastrophically.”

· Goldman Sachs forecast gold at $2,300 an ounce over a 12-month horizon and said commodities were likely headed for a bull market next year.

· Fiscal and monetary policy in developed markets continue to drive interest rates low and spur demand for inflation hedges, the Wall Street bank said.

· Investors now await the final U.S. presidential debate between Trump and Democrat rival Joe Biden on Thursday night, and weekly jobless claims due at 1230 GMT.

· “What we are seeing is this unwillingness to really believe (about a stimulus deal) ... that’s why these moves don’t have near-term follow through,” said DailyFx currency strategist Ilya Spivak.

· Stimulus talks between U.S. lawmakers faced a setback on Wednesday when President Donald Trump accused Democrats of being unwilling to craft a compromise on aid, despite reports of some progress earlier in the day.

· The news dented risk sentiment and lifted the dollar against its rivals, making gold more expensive for holders of other currencies.

· Underscoring the need for additional fiscal support, U.S. Federal Reserve Governor Lael Brainard said the economic recovery is uneven and uncertain and will require continued support to ensure it becomes broad-based and sustainable.

· Investors now turn their attention to the final U.S. presidential debate between Trump and Democrat rival Joe Biden, and weekly U.S. jobless claims due later in the day.

· Elsewhere, silver fell 0.5% to $24.94, platinum gained 0.3% at $888.47 and palladium dropped 0.1% to $2,401.73.

Reference: CNBC