What a difference a day makes, as market sentiment for gold reacts to new aid proposal

Today the bipartisan coalition which had originally presented an aid package of $908 billion announced a revision that has a much higher probability of being passed and implemented before the end of the year. The new comprehensive aid package was broken into two separate bills; the first bill will require $748 billion and contains only the components that both democrats and republicans have already agreed upon. The second bill will entail $160 billion to fund the components that cause negotiations to a stalemate.

According to CBS News, “Senator Joe Manchin, a moderate Democrat from West Virginia, placed two thick stacks of paper on the podium as he announced a comprehensive $748 billion measure, and an additional $160 billion for state and local funding.

After placing the stacks of paper on the podium before him Senator Joe Manchin said, "Bipartisanship and compromise is alive and well in Washington, contrary to what you've been hearing. We've proven that,".”

The senator was surrounded by a group of his fellow collaborators. One of those collaborators Republican Senator Susan Collins called it a, “Christmas miracle” saying that “lawmakers had worked during the Thanksgiving holiday to create this bill.”

By breaking up the original bipartisan proposal of $908 billion into two bills with the most needed aid that has already been agreed upon by both the House and Senate, this aid package will likely be passed. The first bill of $748 billion includes additional funding for the paycheck protection program, unemployment insurance, schools, and allocates funds for vaccine development and distribution. All of these components within this bill have been accepted upon by both Republicans and Democrats.

The second bill contains components that either the Republicans or the Democrats had issues with. It contains the issues that stalemated the first proposal which had little or no chance of passing. The $160 billion proposal contains relief for state and local governments and a liability shield for businesses. These were the two issues that either the Republicans or the Democrats had strong opposition to.

There is brilliance in breaking the first aid proposal into two separate aid bills. It allows the most important and needed aid to quickly be passed by both the House and Senate. The issues that caused the negotiations to come to a stalemate have now been removed and can be dealt with at a later date, in a separate bill that allocates the remaining $160 billion contained in the first bipartisan proposal.

This news was a key factor in gold and silver pricing today as traders witnessed a key reversal that was needed to shift market sentiment.