Gold prices fell on Friday, weighed by a stronger dollar, as investors kept a close watch on the final U.S. presidential election debate and sought further clarity on a corona virus aid package.

U.S. House Speaker Nancy Pelosi on Thursday said negotiators were making progress in talks with the White House over a new corona virus fiscal aid package and a deal could be reached “pretty soon”. White House economic adviser Larry Kudlow however cautioned that there were still “significant policy differences” unlikely to be resolved before the election.

Also, A section of the Treasury yield curve continues to steepen on strengthening hopes for additional US fiscal stimulus. The spread between the US 10- and two-year yields have risen to 71 basis points, the highest level since June 5. The spread has widened by 12 basis points this week alone and is up more than 30 basis points from August lows.

Investors are also watching out for the final U.S. presidential debate that began at 9 P.M ET on Thursday. Democratic presidential candidate Joe Biden is leading polls, the bond market looks to be pricing a surge in spending and deficit. According to Moody’s analytics, Biden’s spending plan would boost the total deficit to $2.6 trillion on a dynamic basis by 2030. Besides, some analysts believe Biden victory would force the Federal Reserve to hike interest rates sooner-than-expected.

U.S. data showed that weekly jobless claims dropped more than expected, while home sales surged to a more than 14-year high in September. With time fast running out, Britain and the European Union began intensified daily talks on Thursday, in a final push for a Brexit deal.

Refinitiv Metals Research said that Investors are likely to hoard gold at a faster pace in 2021, keeping prices elevated amid reduced demand from Jewellers and central banks. Jewelry demand will fall 31% to 1,327 tons this year before rising 9% to 1,447 tons in 2021. Central bank purchases will plunge by half to 312 tons this year and recover slightly to 385 tons next year and Exchange-traded funds (ETFs), which store metal for investors, are seen stockpiling 1,205 tons this year, three times the amount in 2019, and another 1,362 tons in 2021, the most ever.

XAU/USD 4 Hour Chart:

Support: 1891.5 (S1), 1877.9 (S2), 1861.4 (S3).

Resistance: 1921.7 (R1), 1983.2 (R2), 1951.8 (R3).

The yellow metal failed in the fight against the greenback and we expect a bearish trend for XAU/USD.