Gold edged lower after a new wave of virus restrictions in Europe hit sentiment and the chances of a pre-election stimulus in the U.S. receded.
European stocks slid toward their biggest fall in three weeks after Germany, Italy and the Czech Republic posted record increases in virus cases. France imposed a curfew in nine of the country’s biggest cities, including Paris, while London is set to implement new measures on households. The dollar gained on haven buying, putting pressure on bullion.
In the U.S., Treasury Secretary Steven Mnuchin on Wednesday blamed politics for undermining months-long negotiations for further fiscal stimulus.
“Absent a shock to risk sentiment, it appears gold is stuck in a holding pattern before the Nov. 3 U.S. election,” according to a report by Macquarie Wealth Management, noting gold has largely been driven by news flow over stimulus chances. “It looks increasingly likely that any package will be a post-election event, albeit that this could result in a larger boost than any pre-election compromise would have delivered.”
Europe’s leaders will gather in Brussels for a summit on Thursday as discussions with the U.K. over their future relationship enter a critical phase. Negotiations remain at a stalemate, with France refusing to drop demands on fishing rights. Failure to make progress at the summit will lead to the canceling of the talks, setting up the already beleaguered region for more economic pain at the end of the year.
This article was provided by Bloomberg News.