By Barani Krishnan
Investing.com – “Buy the rumor, sell the fact,” is an adage that investors in gold probably know as well as those who punt on stocks.
Despite that, when a $900 billion U.S. stimulus package fails to trigger a commensurate rally, any relative philosophy on the market is unlikely to assuage gold bulls.
At Tuesday’s settlement, benchmark gold futures for February delivery on New York’s Comex settled at $1,870.30, down $12.50, or 0.7%.
It was the second straight day that gold had fallen since the stimulus issued by Congress. Monday’s slide was 0.3%, taking the benchmark futures contract on Comex to a notch under $1,860 and below technical support at $1,868.
Gold’s slide came as the dollar rebounded in response to a tumble in the British pound amid the revelation of the new Covid-19 strain spreading across the U.K., and continued woes over Brexit. The dollar, an alternative play to gold, hit 2-½ year lows last week.
While the drop in gold over the past two days was just about 1%, it was still the sharpest decline in two weeks — a reflection of how anemic the gold market was despite this week’s passage of the $900 billion relief, along with $1.4 trillion in funding to keep the government open.
The total passage of almost $2.3 trillion through Congress and the anticipated impact on inflation seemed lost on gold, a supposed safe-haven.
“Gold will have to wait until next year for another strong catalyst,” said Ed Moya, analyst at New York’s OANDA. “The development of a new variant of the virus will likely trigger harsher restrictive measures across the globe, but additional support won’t be seen until next year.”