Gold falls by 2% as U.S. stimulus negotiations stall

Gold prices fell more than 2% on Tuesday, losing support from its $1,900 perch after negotiations for a U.S. economic stimulus ran into difficulties. The stimulus package was intended to help millions of Americans who were financially hit by the COVID-19 pandemic.

The yellow metal had hit three-week highs above the $1,939 mark on Monday with anticipation that Republican lawmakers aligned with Donald Trump would strike an agreement with rival Democrats on a $1.8 trillion package proposed by the president.

However, U.S. House Speaker Nancy Pelosi ruled out a deal on Tuesday after Senate Majority Leader Mitch McDonnell shrank the offer further to just around $500 billion.

U.S. gold for delivery on December lost 1.8% ($34.35), last trading at $1,894.60 per ounce on New York’s Comex, almost reversing all of the gains it had made since Friday.

Spot gold also fell by 1.5% ($28.91) to $1,893.91 per ounce at 2:42 PM ET (18:42 GMT).

Meanwhile, the Dollar Index saw gains for its second consecutive day on Tuesday, rising by 0.5% to 93.55. On Monday, it hit a three-week low of 93.03.