US dollar continues to trade around the 93.40 level against the basket of six major currencies amid the uncertainty regarding the stimulus package and concerns over the second coronavirus wave. The USD index has been trading in a tight range of 92.90 to 93.60 levels over the past few days.
The latest support for the greenback came from the U.S. Treasury Secretary Steve Mnuchin’s comments who said a new fiscal stimulus package is unlikely before the presidential election.
Increasing virus infections around the world has also moved investor’s focus towards safe-haven assets. Europe is exposed to the second coronavirus wave, which is forcing the region to make restrictions on traveling and leisure. Euro fell amid economic uncertainty and second coronavirus wave.
Gold Forecast is High Versus the US Dollar
Gold price is trading around $1900 level on Thursday after plunging to the $1880 level on Wednesday.
“The (gold) market is still treading water waiting for further clarity on what stimulus package may be needed in the U.S.,” said Cameron Alexander, manager of precious metals research at Refinitiv Metals Research.
“Gold will rise once the details of a possible stimulus package become available, but that may not happen for a while.”
The market analysts believe the US dollar will retreat in the days to come as polls suggest Joe Biden win in the upcoming elections. Biden has promised to announce a big stimulus package for Americans after the elections. The stimulus would lift equities and gold in the investor’s view and reduces focus towards the greenback.
Stock Markets Selloff Support the US Dollar
Meanwhile, poor earnings performance could have a negative impact on the stock markets. US banks have reported smaller than expected revenue and earnings for the third quarter. This is because of low-interest rates and difficulties in generating income from loans. Wall Street is trading in negative territory amid bearish sentiments regarding the earnings season.