Jakarta, CNBC Indonesia – World gold prices strengthened to above US $ 1,900 / troy ounce in Friday trading (9/10/2020), continuing the positive performance 2 days earlier. The United States dollar (US) which was sluggish to make gold shot up.
Launching Refinitiv data at 16:58 WIB, gold rose 1.1% to US $ 1,913.91 / troy ounce in the spot market. In the last 3 days until this afternoon, total gold has shot up to almost 2%. Meanwhile, in the same period, the US dollar index, which measures the strength of Uncle Sam’s currency, decreased 0.34%.
The US dollar is sluggish, the tug of war over fiscal stimulus discussions will not help performance the greenback. The US dollar is in a “hit, backwards” situation in the face of fiscal stimulus.
US President Donald Trump on Tuesday asked the US $ 2.2 trillion stimulus talks to be stopped until the November 3 presidential election.
“I instructed representatives to stop negotiating until after the presidential election,” he wrote on his personal Twitter @realDonaldTrump, Tuesday (6/10/2020) afternoon local time.
The US dollar had strengthened in response to this. However, without fiscal stimulus the US economic recovery will be threatened, and will instead be left behind other countries in Europe and Asia. As a result, the US dollar was again under pressure.
Most recently, President Trump has changed his stance on fiscal stimulus, now urging Congress to approve a stimulus program worth US $ 1,200 in Direct Cash Assistance (BLT) for US citizens, then US $ 25 billion for the aviation industry, and US $ 135 billion in loans for small businesses.
The change in Trump’s attitude has made market player sentiment improve, US stock markets have shot up in the last 2 days.
When market players’ sentiment improves, the US dollar is an asset safe haven to be unattractive. In addition, if the fiscal stimulus is liquid, the amount of money in circulation will increase in the economy and the value of the US dollar will weaken.
Gold though is also an asset safe haven remains strong due to the weakening of the US dollar. In addition, fiscal stimulus together with monetary stimulus were the main “fuel” for gold to strengthen this year to hit an all-time high of US $ 2,072.49 / troy ounce on August 7.
“If there is a deal, the stimulus will have the potential to revive inflation expectations towards the US central bank’s (The Fed) target, along with the Fed’s low interest rates being a very good catalyst for gold” said Bart Melek, chief commodities strategist at TD Securities. , launch Reuters.
CNBC INDONESIA RESEARCH TEAM
(pap / pap)