Gold Perks up As Treasury Nominee Yellen Hints at Big Fiscal Deficit

Gold Perks up As Treasury Nominee Yellen Hints at Big Fiscal Deficit

Gold prices gained a leg higher on Tuesday, reacting to U.S. Treasury Secretary nominee Janet Yellen’s plans to fight the coronavirus-induced economic crisis with big spending.

Gold for february delivery on New York’s Comex settled up $10.30, or 0.6%, at $1,851.40 per ounce.

The benchmark gold futures contract had been caught in a wave of irrational selling lately, losing 3.5% over the past two weeks, as U.S. bond yields spiked on contrarian bets made by traders against looming multi-trillion dollar stimulus plans.

Yellen, a former chair of the Federal Reserve, said at her Senate confirmation hearing that lawmakers in Congress had to “act big” on stimulus to facilitate economic recovery from the Covid-19 pandemic.

The nominee of President-elect Joe Biden, who begins his four-year term Wednesday, said the longer-term benefits of stimulus outweighed the costs, especially with near-zero interest rates making borrowing super cheap for U.S. business.

“I think there is a consensus now that without further action, we risk a longer more painful recession now,” Yellen said. “The smartest thing we can do is act big. In the long run I believe the benefits will far outweigh the costs, especially if you care about helping people who have been struggling for a very long time.”

While gold is generally deemed a safe haven, the yellow metal rallied on Tuesday along with an array of risk assets from stocks to oil.

On the technical front, GOLD  RSI stood at 47.643 the current price is trading  Below  the Moving Averages 20 & 50. So, a Sell trade can be executed with the following target and stop-loss:


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