Gold was X on Wednesday morning in Asia, hit by U.S. President Donald Trump’s shock cancellation of talks over the latest stimulus measures and a strengthening dollar.
Gold futures slid 1.17% at $1,886.45 by 11:44 PM ET (3:44 AM GMT), after hovering near a one-week low hit during the previous session. The dollar was up on Tuesday morning.
Trump, who is still recovering from COVID-19, took to Twitter to cancel the talks with Democrats until after the Nov. 3 presidential election, dashing hopes that Congress would pass the package beforehand. The president’s announcement also puts the U.S. economic outlook onto even-further shaky ground as individuals and companies, including airlines, struggle through COVID-19’s impact.
Fresh restrictions have already been implemented after six U.S. states reported record numbers of new COVID-19 cases, and there are over 35.6 million cases globally as of Oct. 7, according to Johns Hopkins University data.
The U.S. also reported that its trade deficit surged to $67.10 billion in August, the largest in 14 years, against the forecast $66.10 billion and July’s $63.40 billion. With imports rising to $239 billion in the same month, trade could be a potential obstacle to economic growth during the third quarter.
Meanwhile, Federal Reserve Chairman Jerome Powell sounded the warning bell a mere hour before Trump’s tweet, in his keynote speech to the National Association for Business Economics (NABE) conference. Powell warned that the U.S. economy could slip into a downward spiral if COVID-19 is not effectively controlled and called for more economic assistance.
European Central Bank (EBC) chief economist Philip Lane was another keynote speaker at the conference.
Investors now await the minutes from the Fed and ECB’s respective September meetings later in the day. Several Fed speakers will also speak over the coming days, and investors will be looking for further clues to its outlook.
Meanwhile, holdings in SPDR Gold Trust fell 0.32% to 1,271.52 tons on Tuesday, and India’s gold imports in September reportedly fell 59% from a year earlier to the lowest level in four months.