Gold prices rose after US Congress inched closer to delivering long-awaited fiscal stimulus for its COVID-ravaged economy, dragging down the dollar.

The US dollar was trading close to a two-and-a-half year low on Monday following worse than expected October jobs figures – non-farm payrolls grew by only 245,000 people despite forecasts of an almost 470,000 boost.

The weak numbers however reinforced investors’ expectations that fiscal stimulus is on its way – after a team of lawmakers from both sides of congress made additional progress on a US$908 billion package last week. That emergency aid bill will fund further COVID relief measures, but needs to be passed before Friday to avoid the government going into shutdown.

Government’s funding at current levels is due to expire this Saturday and the emergency relief bill will include provisions to keep funding government agencies through until 18 December. A shutdown would see thousands of ‘non-essential’ Government employees furloughed or required to work without pay until a new funding deal is struck.

Stimulus hopes fuel demand for gold

The promise of possible stimulus measures lit a fire under gold, which rallied nearly 2% on Monday to break above US$1860 per ounce and hit a two-week high. Australian gold stocks lifted with the strengthening gold price. Global investment bank Goldman Sachs separately forecast the price to hit US$2,300 per ounce within the next 12 months, as the US dollar continues to fall.

Neil Whitaker, managing director of Australian gold explorer Nusantara Resources, said the price is unlikely to fall backwards.

“It’s come off a little bit towards the end of the year as we’ve come into the US elections and talk of a vaccine, but I don’t think that’s going to impact the coming year,” he said.

“I’m not an economist, but I can see the world is still printing money and the economic woes of the world are not going to disappear any time soon, and gold will remain in a hedge.”

Mr Whitaker made his comments at Reach Markets’ fortnightly ‘The Insider’ webinar last week. You can watch a full recording below, or you can click here to book into our next session where we will be joined by Nickel Mines (ASX: NIC), Cann Group Limited (ASX: CAN) and PainCheck Limited (ASX: PCK).

‘The Insider’ is a great way to hear directly from fast growing Australian businesses. You will get valuable insights to their industries and companies future prospects.

The Insider – Event Details:

Date: Wednesday, 16th December Time: 12 pm AEDT Format: Online, 2 x 15 minute presentations

This is a free event. Click here to book your spot.

Reach Markets have been engaged by NUS to assist with private investor management.

Sources:

• ABC News, Australian shares fall, as Wall Street ‘sugar high’ over COVID-19 vaccine wears off
• Business Insider, Goldman Sachs says gold will surge another 20% and hit $2,300 in the next year, driven by rock-bottom interest rates
• CNBC, Congress aims to fund government for a week to buy time for spending, Covid relief deals
• Mining.com, Gold price rallies to two-week high
• Reach Markets, The Insider online event, 2 December 2020
• Reuters, FOREX-Dollar falls as investors eye more U.S. stimulus; sterling sinks
• Yahoo! Finance, Dollar Down Over Disappointing U.S. Jobs Data, U.S. Stimulus Hopes
• USA Today, Congress faces a government shutdown if a spending deal isn’t reached this week