The spot price of gold is stalling near $1,700 per ounce, while hold futures move slowly near the same mark, amid rising speculation the United States could soon adopt negative interest rates.

Market participants have, according to CNBC, been avoiding making big bets on the price of the precious metal ahead of a speech by the Federal Reserve’s Chairman Jerome Powell on the central bank’s moves to protect the economy against the coronavirus-induced epidemic.

Ilya Spivak, a DailyFx currency strategy, was quoted as saying:

This kind of indecision (by investors) really has to do with uncertainty about whether the Fed would be successful with all this stimulus and a desire for liquidity.

Spivak added that central banks have “already deployed a giant wave of stimulus and are waiting for this lockdown to end to see if that is enough,” and noted speculation the U.S. could adopt negative interest rates may support gold.

This week President Donald Trump urged the Federal Reserve to adopt negative interest rates,  and money making instruments have started to price in the chance of these being set. The markets are awaiting Powell’s speech later today, clarifying the economy’s health.

A note from Citi Research CNBC quoted saying it does not expect the Federal Reserve to go to negative policy rates as it has “plenty of other monetary tools” at its disposal, the phenomenon could be bullish for gold. The note added:

So even as we see the potential for gold market liquidation and broad asset market drawdowns in the next 3-6 months, we think gold trading will still mostly hover in a high-$1,600 to mid-$1,700 handle.

Massive stimulus measures, including quantitative easing, are seen as good for gold as the precious metal is seen as a hedge against inflation and currency debasement. Bitcoin, the flagship cryptocurrency, is believed by some to be “gold 2.0.”

Central banks throughout the world have already unleashed an estimated $15 trillion worth of stimulus to protect their economies. Investors have turned to gold amid the uncertainty, as the holdings of the world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, rose 0.24% to 1,083.66 tonnes this week.

Featured image via Pixabay.