Gold futures are up shortly before the regular session opens on Tuesday. The dollar-denominated asset is supported by a weaker greenback, which is under pressure from the announcement of the approval of larger relief coronavirus controls by the Democratic-led US House of Representatives, while the improved risk appetite kept prices down.
At 11:41 a.m. GMT, February Comex gold is trading at $ 1,883.00, up $ 2.60 or + 0.14%.
Gold rallied at the start of the session on Monday after President Donald Trump signed a $ 900 billion coronavirus relief plan. The measure includes a direct payment of $ 600 to most Americans. The signing came days after Trump demanded a direct payment of $ 2,000.
However, the news also took major US equity futures to new highs so something must have given way and gold prices fell during the regular session as hard assets like gold generally struggle to sustain a rally when there is a demand for higher yielding investments. like stocks.
This is because gold does not pay a dividend to hold it whereas stocks do, which makes it a more attractive asset. Higher Treasury yields have also weighed on gold prices as the precious metal also doesn’t pay interest.
Fast forward to Tuesday …
Gold holds on Tuesday in hopes of further stimulus from the government. On Monday night, the U.S. House of Representatives voted to increase the second round of federal direct payments to $ 2,000, as Democrats accept President Donald Trump’s calls to put more money in Americans’ pockets. The bill now goes to the Senate.
The House passed the fast-track payments with just enough support to meet the required two-thirds threshold. The chamber approved the measure in a vote of 275-134. Democrats backed the bill by a 231-2 margin. Forty-four GOP representatives supported the measure and 130 voted against it, after days of calls from Republican Trump to increase payments to $ 2,000.
The bill now passes through the Republican-led Senate, where he is expected to die. A spokesperson for Senate Majority Leader Mitch McConnell, R-Ky., Did not immediately respond to a request for comment on the House vote on the bill passed by the House. In a statement Sunday applauding Trump’s decision to pass year-end legislation, McConnell did not mention any plans to vote on larger payments.
That’s a long way off, but according to Senate Minority Leader Chuck Schumer, DN.Y., said Monday he would try to get the legislation passed in the Senate on Tuesday. But this is just an important first step. Democrats must find a way to convince Republicans in the Senate to join them.
“Let me be clear: if Senator McConnell does not accept a vote up or down to provide workers in our country with a direct payment of $ 2,000, Congress will not go home for the Saint Sylvester. Let’s do our job, ”he said in a statement.
If the $ 2,000 payment is approved, look for the US dollar to dip and gold prices to rise. Regular price action today suggests that gold traders are hopeful the deal will go through.