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Gold dips as US Treasury Secretary recalls pandemic-related funds
[BENGALURU] Gold prices fell on Friday after US Treasury Secretary Steven Mnuchin called for an end to some of the Federal Reserve's pandemic lending, sparking uncertainty about stimulus programmes that have played a key role in reassuring financial markets.
Spot gold slipped 0.2 per cent to US$1,864.54 per ounce by 0359 GMT and was headed for a second week of decline. US gold futures were up 0.1 per cent at US$1,863.80.
"If the Fed does start shrinking its assistance programme that could be a bit of headwind for gold again... The monetary debasement argument that has supported gold could weaken," said Lachlan Shaw, National Australia Bank's head of commodity research.
In a letter, Mr Munichin told Fed chairman Jerome Powell that US$455 billion allocated to Treasury under the Cares Act should be instead available for Congress to reallocate.
His comments weighed on equities while helping the US dollar halt its week-long slide.
Gold, considered a hedge against inflation and currency debasement, has gained 23 per cent this year, benefiting mainly from unprecedented stimulus measures unveiled to cushion the pandemic impact.
"It's going to be a huge bumpy ride (for gold) waiting for stimulus to come in," said Stephen Innes, chief global market strategist at financial services firm Axi. "It is now looking at US$1,900 into year-end." Bullion was down 1.3 per cent for the week as promising Covid-19 vaccine trials dimmed the metal's appeal.
Silver was flat at US$24.09 per ounce. Platinum fell 0.2 per cent to US$949.78 per ounce, while palladium eased 0.2 per cent to US$2,321.05.