Gold Recovers From A 9-Month Low On Senate Passage Of U.S. Stimulus Bill

Gold prices bounced back from a nine-month low after the divided U.S. Senate passed the $1.9 trillion COVID-relief bill on Saturday. The passage of The American Rescue Plan Act of 2021 pulled down 10-year Treasury yields, which lowered the opportunity cost of holding the non-interest-bearing bullion. It also boosted the demand for the yellow metal as an inflation hedge. However, gold’s gains were capped by a stronger dollar which remained close to a three-week high hit last week and made the metal more expensive for investors using rival currencies.

Gold

Spot gold is currently trading at $1,692.60 per ounce as of 0853 GMT.

The Senate narrowly passed President Joe Biden’s COVID-19 relief plan after a series of last-ditch negotiations and amendment votes. It was approved without Republican support, even from Senators from North Carolina that is expected around $5.1 billion in federal funding from the legislation. The vote was 50-49 since Sen. Dan Sullivan (R-Alaska) was absent. The bill will now return Congress to final passage because it was changed in the Senate. The amendments include the reduction in weekly unemployment benefits from $400 to $300 and the removal of a $15 minimum wage.

The Labor Department reported that job growth in February exceeded analysts’ expectations of 182,000 jobs. Nonfarm payrolls surged by 379,000 jobs due to the reduction in new coronavirus cases. The leisure and hospitality sector led the rally with 355,000 hires.

The U.S. central bank brushed aside concerns over inflation and the rapid rise in bond yields. It also indicated no intention to change its loose monetary policy in the near-term.

Meanwhile, Yemen’s Houthi forces attacked the heart of Saudi Arabia’s oil industry yesterday with missiles and drones. Analysts predicted that this development could bolster the bullion’s safe-haven allure because it is generally considered a safe asset in times of geopolitical and financial uncertainty.

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