Gold Continues to Drop Before The US House of Representatives Vote

Gold prices continue to decline for the third day in a row, one day before the US House of Representatives announced its vote on Friday on the US stimulus package proposal. Gold fell again below $1,800 an ounce, down by 0.80%. Waiting for the necessary support to resume its rise again.

Gold is awaiting the US House of Representatives vote on the $1.9 trillion fiscal stimulus package proposed by US President Joe Biden. Of course, if the bill is approved in the House of Representatives, it is expected to pass it to the US Senate. Here, in the event of approval of the US stimulus package, gold may face some pressure in the short term due to market optimism and the rise in US stocks.

In the long term, the positive developments of the stimulus package are negative for the US dollar, due to the increase in liquidity in the US market, which puts pressure on the currency’s value. With the decline of the US dollar, gold may benefit in the long term due to the opposite relationship between the two parties, as when the dollar rises, gold falls and vice versa, and this is because gold is a currency priced in the US dollar.

Currently, it is clear that gold is ignoring the inverse relationship, as both the US dollar and gold are declining as safe havens. This is against the higher risk currencies and the higher risk assets due to the optimism dominating the markets.