Nippon Steel hires Mike Pompeo to advise on US Steel deal
Nippon Steel also faces objections from the powerful United Steelworkers (USW) union, which fears the deal could lead to job losses.
Gold prices surged on Wednesday amid signs that interest rates may remain weak, boosting inflation expectations as Joe Biden begins the first day of his US presidency.
Spot gold advanced 1.5% to $1,868.68 per ounce by 11:50 a.m. EST, near a one-week high. US gold futures were also up by 1.4% to $1,867.00 per ounce.
The precious metal extended its gains following Tuesday’s comments from Biden’s Treasury Secretary nominee Janet Yellen that weakened the dollar. Specifically, Yellen told the Senate Finance Committee that a slew of state spending was needed to fight the covid-19 pandemic, while playing down concerns about the debt it creates.
She also disavowed using exchange-rate policy to weaken the dollar, a difference from outgoing Treasury Secretary Steven Mnuchin, without explicitly referring to a “strong” dollar.
“A Biden presidency supported by control of the House and Senate, ought to be very favorable for gold,” Bryan Slusarchuk, CEO of Fosterville South Exploration, said in a statement.
Despite the historic challenges the US faces, Slusarchuk is optimistic. “Already, in the days leading up to the inauguration, the Democratic leadership has been talking of support for a hugely increased stimulus package of nearly two trillion dollars,” he said.
With Biden officially becoming the 46th president of the US on Wednesday, investors will now turn their focus on his $1.9 trillion stimulus package proposal and the pace of covid-19 vaccine distribution.
A JPMorgan fund manager told Bloomberg this week that increased government spending and the global vaccine roll-out would revive inflation risks.
Gold is considered a hedge against inflation, which can result from widespread stimulus measures. It is also seen as a safe haven against any economic or political uncertainties.
“Gold at $2,000 is still achievable, probably by the middle of the second quarter when a good amount of people get inoculated and there’s so much cash in the system with demand almost coming back to normal,” Howie Lee, an economist at OCBC Bank, told Reuters.
“People will start looking at inflation very closely then,” Lee added.
(With files from Bloomberg and Reuters)
