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The U.S. Democratic Party drafts a $2.4 trillion stimulus proposal, Short-term pressure on gold prices

The U.S. Democratic Party drafts a $2.4 trillion stimulus proposal
It is reported that the Democrats in the U.S. House of Representatives have begun drafting a stimulus proposal with a scale of approximately US$2.4 trillion for possible negotiations with Republicans in the White House and Senate. Both Pelosi and Finance Minister Mnuchin expressed their hope to restart negotiations earlier on Thursday, but did not give any hint that they were close to reaching a compromise.

Short-term pressure on gold prices
Although the recent economic downside risks remain high, and the epidemic continues to further hit the recovery prospects. However, the previous sharp drop in US stocks caused investors to sell other assets to obtain cash. At the same time, the Fed's recent overall dovishness was less than expected, which caused investors to flood into the US dollar and squeeze the safe-haven demand for gold. In the short term, the market needs to continue to pay attention to the progress of the US stimulus plan. If the two parties finally reach an agreement, it may further push up the market's inflation expectations and partially alleviate the market's liquidity demand for US dollars, which will be able to support gold.

 

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