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Gold eases as new coronavirus strain rattles markets

 

·         Gold edged down on Monday as fears of a new coronavirus strain roiled markets and investors opted for the dollar, while the metal gained some support from a U.S. stimulus package.

 

·         Spot gold fell 0.2% to $1,877.83 per ounce, having earlier hit its highest since Nov. 9 at $1,906.46.

 

·         U.S. gold futures settled down 0.3% at $1,882.80.

 

·         “Gold market traders in general are looking at the Senate in the U.S. and it is a foregone conclusion that this stimulus deal that went through last night is going to pass this afternoon,” said Bob Haberkorn, senior market strategist at RJO Futures.

 

“Gold will trade higher as the week goes on, but today I think traders are getting their heads around the UK strain.”

 

·         Bullion had jumped more than 1% earlier in the session, helped by reports that U.S. congressional leaders reached agreement on a $900 billion package. But it later fell as much as 1.3% as the dollar index rebounded off multi-year lows to an over one-week high as fears of a highly infectious new coronavirus strain dragged the pound and euro down.

 

·         News of the strain also dented risk sentiment, leading to a slump in European equities and Wall Street’s main indexes.

 

·         Gold-backed ETFs record first net outflow in 2020: WGC

The global holdings of gold-backed exchange-traded funds (ETFs) and similar products dropped by 107 tonnes in November, recording the first monthly net outflow this year, data from the World Gold Council (WGC) showed.

During the first 11 months, net inflows of gold ETFs totaled 916 tonnes, bringing global holdings to 3,793 tonnes, or around 215 billion U.S. dollars.

Gold ETFs listed in North America saw an outflow of 62.3 tonnes in November, while gold ETFs listed in Europe dipped by 42.4 tonnes, the data showed.

The WGC noted that the steep decline of international gold prices, as well as rising risky assets, explained much of the November drop in global ETFs holdings.

Since its debut in 2003, gold ETFs and similar products have accounted for a significant part of the gold market, with growing acceptance among both institutional and individual investors. Enditem

 

·         Gold, considered a hedge against inflation, has risen about 24% this year amid the massive stimulus unleashed globally.

 

·         “Today’s price action for gold reminded traders of the panic selling that occurred in March. The prospects of more stimulus have been driving gold higher, but today’s short-term dollar surge is disrupting that thesis,” Edward Moya, senior market analyst at OANDA, said in a note.

 

“Gold’s bullish trend is still intact but could still be vulnerable if the dollar comeback lasts a couple of days.”

 

·         On the economic data front, investors will receive new readings on consumer confidence and existing home sales on Tuesday.

 

·         In other metals, silver rose 1.5% to $26.16 an ounce, having hit its highest since Sept. 16 at $27.38 earlier.

·         Palladium fell 2.2% to $2,309.77.

·         Platinum dropped 2.3% to $1,012.39.

 

·         New COVID-19 strain inflicts pain on equities and oil

A gauge of equities around the world fell on Monday and oil prices plunged as concerns about a new coronavirus strain in Britain overshadowed optimism over a vaccine-fueled rebound in economic growth.

Volatility in U.S. equities jumped as the indexes swooned. Though well off its highs in afternoon trading, the Cboe Volatility Index, known as Wall Street’s “fear gauge,” was still on track for its largest one-day gain since late October.

 

·         CORONAVIRUS UPDATES:

Global Cases: 77.68M (+510,379)

Global Deaths: 1.70M (+8,682)

 

U.S. Cases: 18.45M (+177,356)

U.S. Deaths: 326,626 (+1,695)

 

U.K. Cases: 2.07M (+33,364)

U.K. Deaths: 67,616 (+215)

 

TH Cases: 5,289 (+382)

TH Deaths: 60

 

Myanmar Cases: 116,982 (+848)

Myanmar Deaths: 2,465 (+22)

 

·         Congress prepares to vote on stimulus deal

Congressional leaders in Washington moved toward the passage of a $900 billion economic relief package. An agreement was reached on Sunday night, but the text of the final deal was not released until Monday afternoon. A vote is expected on Monday night.

During Monday’s regular market hours, stocks opened sharply lower amid concerns about a new variant of Covid-19 in the United Kingdom. Many European countries implemented travel restrictions on visitors from the U.K., and New York Gov. Andrew Cuomo called for the United States to take similar steps.

However, many experts, including those from the World Health Organization, said on Monday that the coronavirus vaccines from Pfizer and Moderna would likely be effective against the new variant and that Covid was mutating at a slower pace than the seasonal flu.

 

·         Majority of U.S. House clears coronavirus aid bill through procedural hurdle

A majority of the U.S. House of Representatives on Monday voted to move a $900 billion coronavirus aid bill coupled with a $1.4 trillion government funding measure through a procedural hurdle, clearing the way for a vote on passage this evening.

Congress was rushing to pass the massive legislation before a midnight deadline.

U.S. House begins debate on $900 billion coronavirus package as funding deadline looms

The White House-backed bill includes $600 payments to most Americans as well as additional payments to the millions of people thrown out of work during the COVID-19 pandemic, just as a larger round of benefits is due to expire on Saturday.

 

·         The House of Representatives is expected to vote sometime Monday evening.

Senate Majority Leader Mitch McConnell told reporters at the Capitol that passage of the legislation in the Senate will “probably be late but we’re going to finish tonight.”

McConnell, interviewed by Fox News, pledged to renew his drive for the protections against corporate lawsuits in whatever coronavirus aid bill the incoming Biden administration pursues in early 2021.

 

‘HELP IS ON THE WAY’

President-elect Joe Biden, a Democrat, has urged Congress to consider further stimulus for him to sign into law when he takes office on Jan. 20. “My message to everyone out there struggling right now, help is on the way,” he said in a statement.

Without action by midnight (0500 GMT Tuesday), an array of federal agencies would run out of money and would have to begin furloughing workers and scaling back programs.

 

·         Congress agrees to $900 billion Covid stimulus deal after months of failed negotiations

Congress reached a deal Sunday on a $900 billion coronavirus relief package, a long-delayed effort to boost an American health-care system and economy buckling under the weight of the pandemic.

Congressional leaders announced agreement on a bill — which would send new federal assistance to households, small businesses and health-care providers for the first time in months and provide $1.4 trillion to fund the government through Sept. 30 — after days of start-and-stop efforts to finish a deal. They released text of the legislation Monday afternoon and aim to pass it before midnight.

Lawmakers plan to pass the relief and funding bill on Monday.

To avoid a government shutdown that would have started at 12:01 a.m. ET on Monday, Congress approved a one-day spending measure to keep the lights on until 12:01 a.m. ET on Tuesday. President Donald Trump signed that bill late Sunday, according to a tweet from White House spokesman Judd Deere.

 

 

The deal on one of the largest rescue bills in U.S. history follows months of sniping on Capitol Hill over how best to fight a once-in-a-century crisis.

 

·         Americans will get stimulus checks as soon as next week, Mnuchin says

Treasury Secretary Steven Mnuchin told CNBC on Monday that Americans who qualify for direct payments in new Covid relief legislation could see that money hit their bank accounts in a matter of days.

Mnuchin’s comments came hours before Congress’ expected vote to approve the $900 billion Covid-19 relief bill. The latest bill includes provisions akin to those in the original CARES Act, the $2.2 trillion relief package approved in March.

Individuals including children will receive $600 in direct payments. A family of four could end up with $2,400. The payments decrease for people who made more than $75,000 during 2019. They would phase out completely for people who made above $99,000 that year.

Democrats said the bill would put $284 billion into Paycheck Protection Program small business loans. The new bill would also direct another $20 billion to small business grants and $15 billion to live event venues.

If passed, the legislation would include a $300 federal weekly unemployment supplement and temporarily keep in place pandemic-era programs that expanded unemployment insurance eligibility.

For his part, Mnuchin favored a more targeted spending bill that focused efforts on helping industries hardest hit by the pandemic like airlines and restaurants.

“Unemployment has come way down,” Mnuchin said in the telephone interview on “Squawk on the Street.” “This is now much more targeted. I expect it’s needed in a short period of time, and I think this will take us through the recovery.”

 

·         European Medicines Agency authorizes Pfizer vaccine for use in the EU

 

·         U.S. plans to study allergic reactions from Pfizer’s Covid vaccine

 

·         Joe Biden receives Covid vaccine on live television, encourages Americans to get inoculated

 

·         WHO says Covid is mutating at slower rate than flu as new strain in U.K. appears more contagious

 

·         Britain and France may reach deal on reopening border on Tuesday - BBC

 

·         UK sticking to Dec. 31 Brexit deadline as EU leaders hold red lines

The U.K. remains committed to ending its transitional period with the European Union on December 31, a spokesperson for Prime Minister Boris Johnson has said.

Reference: CNBC, Reuters, China.org, Worldometers, BBC