Gold eased on Wednesday, as doubts over the progress of a U.S. stimulus package made investors cautious, with further pressure added by reports of developments on a COVID-19 vaccine.
Spot gold fell 0.3% to $1,808.67 an ounce by 0505 GMT, after rising more than 2% on Tuesday, its biggest jump in nearly a month. U.S. gold futures dropped 0.3% to $1,813.30.
Top Senate Republican Mitch McConnell said the U.S. Congress should include a fresh wave of coronavirus stimulus in a $1.4 trillion spending bill.
“There’s a little bit of uncertainty over the stimulus deal to go through, and given it’s at the lower end of the scale, it is not super supportive,” said Stephen Innes, chief global market strategist at financial services firm Axi.
Treasury Secretary Steve Mnuchin and House of Representatives Speaker Nancy Pelosi held stimulus talks on Tuesday for the first time since the U.S. elections.
A bipartisan group of senators and House members proposed coronavirus relief measures worth $908 billion.
Although the talks are a step in the right direction on the fiscal spending front and signal further co-operation likely ahead, the stimulus efforts are well below what the market was hoping for, Innes added.
Weighing further on bullion was news that U.S. officials target mid-December to kick off vaccinations for millions of Americans against COVID-19.
While optimism for economic recovery might continue to push investors away from gold, the downside is likely to be limited as real yields are still negative and could fall further if stimulus hopes are lifted, said IG Markets analyst Kyle Rodda.
Non-yielding gold, viewed as a hedge against inflation, usually benefits from lower interest rates that reduce its opportunity cost.
Silver fell 1.4% to $23.66 an ounce. Platinum dropped 1.5%, to $985.29 and palladium was down 0.4% at $2,396.91.
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