Gold futures headed higher on Monday, extending gains after the Federal Reserve unveiled an aggressive round of additional stimulus, including virtually unlimited purchases of Treasurys and mortgage-backed securities.
Gold had initially gained ground as global stocks traded lower on continued worries over the tremendous economic hit expected from the global COVID-10 pandemic. Gold extended gains, however, as U.S. stock-index futures turned higher in the wake of the Fed move.
The precious yellow metal, however, has faced some friction as a haven asset, as cash-strapped investors have been forced at times to sell bullion amid the persistent global rout in financial markets that has knocked most markets into bear-market territory. A strengthening dollar also has weighed on the price of precious metals, as the cases of the infectious disease that was first identified in Asia in December accelerates.
The U.S. Senate failed to advance a bill on the stimulus package, as talks continue on Monday between Republican and Democrats.
Germany, meanwhile, may authorize more than €350 billion in new debt, according to reports, as Chancellor Angela Merkel was quarantined after coming into a contact with a doctor who had contracted the illness.
“Gold continued to react to financial market selloffs and, at times, supported as government and monetary authorities’ attempts to manage the economic and financial ramifications of COVID-19,” wrote Stephen Innes, chief market strategist at AxiCorp, in a Monday research note.
Gold for April delivery GCJ20, 3.193% on Comex rose 2.4% to $1,590 an ounce, after putting in a weekly decline for the most-active contract of 2.1%, according to FactSet data.
The dollar weakened after the Fed move, providing…
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