Gold on Friday jumped after US Secretary of the Treasury Steven Mnuchin said that his agency and the US Federal Reserve have enough firepower to continue to support the economy.
The comments came a day after Mnuchin called for several emergency lending programs to expire by the end of the year.
“Markets should be very comfortable that we have plenty of capacity left,” Mnuchin said on CNBC.
He also said that he would talk with US Senate Majority Leader Mitch McConnell and House of Representatives Minority Leader Kevin McCarthy about a strategy that could be used to approach House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer.
Spot gold on Friday rose to US$1,873.30 an ounce.
The surge in gold “is just based off his comments,” Bob Haberkorn, senior market strategist at RJO Futures, said by telephone. “When they can support it, that means there’s more money in the system.”
Still, prices dropped 0.77 percent for the week — the second week of declines — following positive news over shots being developed by companies including Pfizer Inc.
Global bullion exchange traded fund (ETF) holdings — which were crucial to gold’s rally to a record in August — are now at the lowest in more than two months.
While ETF investors have typically tended to take a long-term view of the market, the high cost of rolling futures contracts forward might have brought in more short-term traders, such as hedge funds into ETFs, said Marcus Garvey, head of metals and bulks commodity strategy at Macquarie Group Ltd.
That has led to more “fast money” in the products, meaning a quicker response to changes in gold’s outlook.
Gold for December delivery rose US$10.90 to US$1,872.40 an ounce.
‧ Silver for December delivery rose US$0.31 to US$24.36 an ounce and December copper was rose US$0.09 to US$3.29 a pound.
Additional reporting by AP
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