Gold gains on softer dollar

Gold gains on softer dollar; US Senate pandemic aid vote eyed

Credit: AFP

Gold inched higher on Tuesday as a softer dollar underpinned the metal, with market participants looking forward to a US Senate vote on increased pandemic aid. Spot gold rose 0.4% to $1,877.96 per ounce by 0314 GMT, after closing slightly lower in the previous session.

The metal had climbed as much 1.3% on Monday after the passage of a near $900 billion US stimulus package. US gold futures fell 0.1% to $1,879.40. Against a basket of currencies, the dollar fell 0.2%, bolstering gold's appeal to other currency holders. "While a weaker dollar has supported gold, the metal is going to have a hard time finding a supportive narrative given much of the good news - passing US stimulus, a Brexit deal – looks priced in while a resurgent pandemic may drive haven dollar buying," said DailyFX currency strategist Ilya Spivak.

"Gold could come under more pressure as the Fed has little room to ease further and there is potential for at least a discussion about tapering quantitative easing if the recovery outlook improves next year." Investors now await the US Senate vote on President Donald Trump's demand for $2,000 COVID-19 relief checks after it was passed by the House of Representatives.

Gold, seen as a hedge against inflation, has gained more than 23% this year, largely driven by a raft of stimulus measures unleashed to mitigate the impact of the pandemic. Hedge funds and money managers raised bullish positions in COMEX gold and silver contracts in the week to Dec. 21, the US Commodity Futures Trading Commission said on Monday. Silver rose 0.5% to $26.28 an ounce. Platinum climbed 0.8% to $1,039.66 and palladium was up 1.5% at $2,359.18.