Metals Stocks: Gold climbs for a second session, rebounding from a recent 2-month low

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Gold futures rose Monday, looking to extend their gains to a second session, as prices continued to rebound from a recent drop to a two-month low.

The poor U.S. nonfarm payroll numbers “set the scene for gold’s recovery from below $1,800 on Friday, with the tone further boosted by the passing of the budget reconciliation process in Congress at the end of the week,” said Rhona O’Connell, head of market analysis, EMEA and Asia, at StoneX. 

This means that only a simple majority is needed in the Senate to get the bill through” and raises the probability of the larger $1.9 trillion package pushed by President Joe Biden rather than the smaller $600 billion proposal from the Republicans, she said in a note.

On top of that, Treasury Secretary Janet Yellen over the weekend made comments “arguing for a robust economic stimulus package in order to expedite a return to full employment in 2022,” said O’Connell.

A second U.S. COVID-19 economic stimulus package would create more debt and likely weaken the value of the dollar, lifting demand for dollar-denominated gold prices. In Monday dealings, the ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was down 0.1%.

Gold for April delivery GCJ21, +1.41% rose $23.90, or 1.3%, to $1,836.90 an ounce on Comex. Prices climbed on Friday, after dropping more than 2% Thursday to its lowest finish since late November.

The yellow metal found support Friday, trimming a weekly loss after a weaker-than-expected jobs report halted a dollar rally. The weak jobs report was seen adding to momentum for a larger round of aid spending.

The push for additional spending has sparked a debate over the potential for the measures to overheat the economy and spark inflation.

With investors piling into stocks and other assets traditionally viewed as risky, a haven asset like gold has limited upside potential, wrote analysts at Commerzbank, in a Monday note.

Meanwhile, March silver SIH21 was up 61.1 cents, or 2.3%, at $27.63 an ounce following a volatile trading week that ended with prices up by just about 0.4%.

Read: Silver’s rally gets snuffed out, but the precious metals remains undervalued

“We see silver as a physical demand driven market in need of further declines in U.S. infections and signs that the U.S. is beginning to reopen certain regions,” analysts at Zaner Metals said in a daily report Monday.

Among other metals, March copper HGH21, +0.97% tacked on 1.1% to $3.667 a pound. April platinum PLJ21, +4.59% added 4% to $1,179.20 an ounce and March palladium PAH21, +0.67% rose 0.7% to $2,342 an ounce.