Gold rises as traders look forward to’s US stimulus package deal

© Reuters.

From Sergio Held – After a week of downtrend, gold rose in Asia on Friday morning as investors waited for news from the US on a $ 1.9 trillion stimulus package proposed by President Joe Biden.

up 0.15% to $ 1,844.00 by 9:53 p.m. ET (2:53 p.m. GMT).

Gold moves followed overnight news that US GDP contracted 3.5% for all of 2020, the worst contraction since 1946 after World War II.

Despite the impact of the pandemic around the world, demand for gold fell to its lowest level since 2009, according to the World Gold Council.

“The far-reaching impact of the coronavirus pandemic was the driving factor behind weak consumer demand in 2020, causing annual demand to decline 14% to 3,759.6 t, the first sub-4,000 t year since 2009 “said the London-based organization.

The US bailout could put the gold price under pressure even if it helps to support economic growth.

“Without acting quickly, we risk a prolonged economic crisis that makes it difficult for Americans to get back to work and get back on their feet,” said Brian Deese, White House economic adviser, Thursday.

Gold investors will be looking for clues about the movement of the package and other economic measures to help contain the effects of COVID-19.

The International Monetary Fund (IMF) said Thursday that budget spending was needed to limit the economic impact of the pandemic.

“Because of this crisis, household spending was required. This increase in budget spending alongside the collapse of production has brought debt levels to record levels in many countries, ”said Gita Gopinath, economic advisor and director of research at the IMF. “The fact that we have low interest rates and that we are back to growth now in 2021 should help stabilize debt levels in many countries. However, it is very important for all countries to have medium-term fiscal frameworks that ensure that debt remains sustainable. “

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