Gold rises as investors focus on big U.S. stimulus bets

Gold rose on Monday as investor focus returned to prospects of a substantial U.S. stimulus package, which bolstered bullion’s appeal as an inflation hedge and offset pressure from a resultant rally in equities and a firmer dollar.

Spot gold rose 0.8% to $1,825.69 per ounce. U.S. gold futures also added 0.6% to $1,822.90.

President Joe Biden and his Democratic allies in Congress cleared the path for their $1.9 trillion COVID-19 relief package as lawmakers approved a budget outline that will allow them to muscle Biden’s plan through in the coming weeks without Republican support.

“Gold is drawing strength from the renewed optimism over U.S. stimulus plans and rising inflation expectations,” said Lukman Otunuga, senior research analyst at FXTM. “The metal continues to be pulled and tugged by conflicting forces,” and while gold bulls remain protected by the ‘reflation trade’, stimulus hopes continue to lift the market mood and overall risk sentiment, Otunuga added.

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Treasury secretary who abolished gold standard: George Shultz dead at 100
KITCO/ Michael McCrae

George P. Shultz, who held many key roles in Republican administrations, died yesterday at 100, according to an announcement by the Hoover Institution.

While only treasury secretary for two years under Nixon, his term was consequential. Shultz and Paul Volcker, who was under secretary of the Treasury for international monetary affairs at the time, both supported Nixon’s decision to abolish the gold standard. Called the Nixon Shock, the president implemented a wide range of economic policies in the early ’70s to stop inflation. Wages and prices were frozen, a surchage on imports was implemented, and the U.S. dollar’s direct convertability to gold was abolished. The result was a shift from the Bretton Woods system to an international regime of free-floating fiat currencies.

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Gold edges higher, shakes off stronger dollar
William Watts/MarketWatch

Gold futures gained ground Monday, shaking off a stronger dollar and a rise in Treasury yields to extend a bounce after hitting a two-month low last week.

Gold for April delivery GCJ21, +1.26% rose $13.40, or 0.7%, to $1,826.40 an ounce on Comex. March silver SIH21, +2.04% was up 25.1 cents, or 0.9%, at $27.27 an ounce.

The yellow metal bounced on Friday, trimming a weekly loss after a weaker-than-expected jobs report halted a dollar rally. The weak jobs report was seen adding to momentum for President Joe Biden’s proposed $1.9 trillion package of coronavirus aid spending.

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