The US dollar (USD) is still in a state. That currency was depressed after President Donald Trump relented and passed the Covid-19 stimulus. It was previously known that Trump threatened not to sign the proposal. He considered that the amount proposed was too small.
For information, the dollar index has weakened for three consecutive days. President Donald Trump has finally signed off on a $2.3 trillion stimulus deal. The move could prevent a partial shutdown of the federal government that was supposed to begin today.
He had previously written a statement on his Twitter account. Trump said that there is good news for the Covid stimulus. The ratification of the proposal certainly has an impact on the market. The USD is reportedly under pressure. Interestingly, that made gold increases.
The Pound is Still Below its Highest Level
From the data, it shows that the pound is still moving below its highest level for two and a half years. This is due to the Brexit agreement between the UK and the EU which has finally found a solution. Sterling's gains were hampered by a deal for some reason.
The reason for this is because Brexit does not cover the UK financial sector. The Sterling corrected about 0.9% to an area of 1.3242. Previously, one of the major currencies had reached an area of 1.36242. That was its highest level since June 2018.
Meanwhile, the EU itself is also yet to make a decision on whether to grant access to the UK for euro area financial markets or not. Some predict that the Euro and Pound will weaken against the USD in global markets. This is what Mitsuo Imaizumi said.
He is head of a forex strategy for Daiwa Securities in Tokyo who predicts the pound and euro will weaken against the USD. The target is between 1.3 and 1.5 by the end of summer 2021. Given market conditions, what it conveys can be very reasonable and true.
Gold Price Strengthening
The spot price of gold reportedly increased as much as 0.5% to an area of $1,880 per troy ounce. This position occurred this morning after closing slightly weaker in the previous trading session. Yesterday, the price of gold rose so sharply by about 1.3%.
That comes after the ratification of the US stimulus package by Donald Trump. Meanwhile, the USD is still depressed to this day. That is one of the trigger factors that can increase the attractiveness of gold. The signed stimulus turned out to make many parties respond.
The United States House of Representatives is now controlled by a Democratic stronghold. Reportedly, they will vote in response to President Donald Trump's request to raise $2,000 in Covid benefits. This triggered uncertainty about the request in a Senate that is controlled by the Republican stronghold.
Gold as An Anti-Inflation Asset
Gold is one of the main objects in trading in the market. This commodity is seen as an anti-inflation asset that will always attract the attention of many market participants. Therefore, this yellow metal has strengthened by more than 24% this year.
That situation is much better than other market's objects. The rising gold price was largely triggered by the amount of stimulus launched to mitigate the impact of the pandemic. Then, news of the availability of effective and safe vaccines also made this commodity react.
The two vaccines most likely to be used today are from Pfizer and BioNTech. For information, the distribution of 200 million doses of the Covid-19 vaccine developed by Pfizer and BioNTech throughout Europe is expected to be completed in September next year.
In line with gold, silver also gained 1.3% to a range of $26.50 per troy ounce. Meanwhile, Platinum increased by about 0.7% and palladium gained 0.8%. Various conditions in the market are the supporting factors for that.
