Gold Slides On Dollar Strength

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Gold prices eased on Tuesday as the dollar hit a near one-week high against rivals amid escalation of U.S.-China tensions in the South China Sea, continued political uncertainty in Italy and doubts over the speed and size of U.S. stimulus.

Spot gold slipped 0.2 percent to $1,852.50 per ounce, while U.S. gold futures were down 0.1 percent at $1.851.90.

China announced today it would conduct military exercises in the South China Sea this week, just days after Beijing bristled at a U.S. aircraft carrier group’s entry into the disputed waters.

Meanwhile, index provider MSCI Inc said it will remove five Chinese firms from its global index as of the close on Jan. 27 in the absence of an update on a Trump administration order banning Americans from investing in certain Chinese companies.

Italian Prime Minister Conte is set to resign today and try to form a new coalition government ahead of a key vote on judicial reforms later this week, which commentators suggest the government was on course to lose.

On the stimulus front, U.S. President Joe Biden said he’s open to negotiations on his $1.9 trillion Covid-19 relief proposal, but didn’t rule out pursuing a Democrat-only route for passage.

U.S. Senate Majority Leader Chuck Schumer said earlier Monday an aid package was unlikely before mid-March, just when jobless benefits from the last package will be running out.

A number of GOP Senators have expressed skepticism about the need for additional stimulus after recently approving a $900 billion relief package.

The material has been provided by InstaForex Company – www.instaforex.com

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